Pennsylvania remains one of a dwindling number of states to reject, so far, one of the new federal health care law's chief means for vastly expanding coverage.
Gov. Tom Corbett has cited cost as the chief reason for declining to participate in the expansion of Medicaid, even though the Affordable Care Act makes that expansion a very good deal for the state government. Under the law, the federal government would assume the entire cost of the expansion for two years, beginning in 2014, and the state would pick up 10 percent after that.
Even so, the governor's concern has been rooted entirely in cost. Now, an analysis by the RAND Corp. for the Hospital and Healthsystem Association of Pennsylvania demonstrates that the proposal would be in the commonwealth's benefit, beyond the sole question of the state government's cost.
But even on cost, the RAND analysis makes an important observation. Because the federal government will assume costs for the expansion for two years, while other Medicaid-related costs also increase, the state's cost for Medicaid will increase by the same amount over those two years regardless of whether the state signs on to the expansion. If the state signs on to the expansion, benefits will increase. If it doesn't, costs will increase while benefits will remain stable or decline.
Moreover, signing on will increase federal spending in Pennsylvania by $2.5 billion a year, which would increase the state's gross domestic product by about $3 billion.
And, the RAND work is a reminder of the original objective - to expand health care coverage. With Medicaid expansion, about 5 percent of Pennsylvanians below Medicare age, 65, would be left without coverage. That is about 500,000 people, compared with about 1.3 million now and about 850,000 who would be uncovered if the new federal law kicks in without the Medicaid expansion.
The hospital association is an interested party because, under the Medicaid expansion, hospitals finally would be paid by newly insured patients for care that they now often provide for "free." Those costs inevitably get rolled into prices for insured patients.
But the RAND analysis is a reminder that health care is not just a cost but a major industry that generates economic activity. Making that industry healthier is another reason that the governor should agree to the Medicaid expansion.