Healthcare Business News

For states, impact of Medicaid expansion would vary: study

By Jessica Zigmond
Posted: November 26, 2012 - 3:30 pm ET

Some states would see savings while others would experience cost increases as a result of the health reform law's provision to expand Medicaid, according to a report from the Kaiser Family Foundation (PDF).

As states consider whether to expand their Medicaid programs—based on the Supreme Court's ruling this past summer that gives them this option—the new analysis shows Medicaid spending would increase by about $1.03 trillion between 2013 and 2022, with federal spending rising by $952 billion, or about 26%, and state spending increasing by $76 billion, or less than 3%, over that period.

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The Medicaid expansion continues to be a thorny issue for both state and federal lawmakers due to cost concerns. Consumer advocacy groups such as Families USA contend this provision of the law will essentially provide free money for states to expand their Medicaid programs and reduce the number of uninsured as the federal government will pick up a large share of the costs early on. Opponents argue that states will be stuck with a long-term commitment that will place an additional strain on already-strapped state budgets.

In this study, analysts used data from the Urban Institute's Health Insurance Policy Simulation Model to provide both national and state estimates of the effects of the Patient Protection and Affordable Care Act's effects on federal and state Medicaid costs and enrollment. Overall, the study shows that costs to implement the expansion would vary across the country, with states such as Maine, Maryland, Massachusetts, New York and Vermont seeing savings under the health reform law because of higher matching rates for populations that are already covered. Meanwhile, states like Florida, Mississippi and Nevada, which had large uninsured populations before any coverage expansions, could see increases in state costs.

The authors also found that an additional 21.3 million people would gain coverage in the expansion, including about 7 million from increased participation among the current eligible population. The remaining 14.3 million would be those newly eligible under the health reform law. “In combination with other ACA provisions, implementing the Medicaid expansion would reduce the number of uninsured by 48%, relative to the number of uninsured without the ACA,” the study said.

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