Note: This article is part of Mississippi Today’s ongoing Mississippi Health Care Crisis project. Read more about the project by clicking here.
Mississippi would receive $1.61 billion in federal funds for the first year of Medicaid expansion and $1.64 billion in the second year, according to a study authored by the state economist’s office.
The state’s top economists forecasted that Mississippi would collect $1.36 billion in year three, $1.38 billion in year four, and increasing by smaller percentages going forward.
The study, released by state economist Corey Miller and senior economist Sondra Collins of the University Research Center in September 2021, assessed the financial effects if state leaders expanded Medicaid in 2022. Choosing to opt into the expanded federal Medicaid program would not only provide more than 200,000 primarily working Mississippians with basic health care coverage, but it would be a boon to the state’s economy, the experts found.
Importantly, the economists found that the 10% matching costs the state must cover if it expanded Medicaid would be more than covered by health care-related savings to the state and new tax revenue generated.
But of course, the expansion the economists forecasted in the 2021 study did not happen. State leaders, primarily Gov. Tate Reeves and House Speaker Philip Gunn, continue to block efforts to expand Medicaid. Thirty-eight other states have expanded Medicaid, and South Dakota is expected to become the 39th after voters there approved a Medicaid expansion measure on the November ballot.
The Mississippi study pointed out that federal COVID-19 relief legislation, the American Rescue Plan, provides states that have not expanded Medicaid a greater financial incentive to do so. The study estimates that the incentive would result in an additional $306.4 million for Mississippi the first year and $316.2 million the second year.
After two years, the incentives go away. In the University Research Center study, those two years of incentives are included for 2022 and 2023. But under the American Rescue Plan, Mississippi would get those incentives the first two years of Medicaid expansion, regardless of the years that expansion occurred.
Based on the study, which looks an expansion beginning in 2022, the amount of federal funds would decline starting in 2024 because the incentives would go away. But the state would receive similar federal funds on a yearly basis whenever it expands Medicaid. It is just losing out on those funds the longer it waits to adopt the expansion.
The federal Medicaid money coming into the state, whether for the traditional Medicaid program or for expansion, in reality goes to health care providers to pay for services rendered to Medicaid beneficiaries. This would directly help hospitals across the state, which are battling rising health care costs and struggling to cover care for uninsured patients. The federal funds would not stay in state coffers for legislators to dole out in other non-health care areas and it does not go to beneficiaries. But the two years of ARPA-related incentives to expand Medicaid could be used, various studies have pointed out, to mitigate state costs for Medicaid expansion in future years.
The federal government pays 90% of the health care costs for the people receiving benefits through Medicaid expansion. The state is responsible for the additional 10% and for administrative costs.
Those who earn less than 138% of the federal poverty level ($18,754 for an individual) qualify for Medicaid expansion. The state pays a higher matching rate for people on the traditional Medicaid program. Those receiving traditional Medicaid benefits are primarily the disabled, poor pregnant women, poor children and some poor senior citizens.
Even with the state’s mandated match, the University Research Center study concludes that the economic boom caused by Medicaid expansion, based on the billions of dollars in federal funds flowing into Mississippi, will grow the state’s coffers as much as $44 million annually, increase the state’s gross domestic product, modestly grow the state’s population and increase jobs on average of 11,300 per year over a five-year period.
“However, the state would need to increase its current supply of employees in the health care field to realize these job gains,” according to the study.