Health Reform Medicaid

Medicaid Expansion and States’ bottom line

A recent RWJF Issue Brief notes that states that expanded Medicaid received more revenue from the federal government and had less state-level spending on programs that support the uninsured.

In examining Medicaid expansion across eight states—Arkansas, Colorado, Kentucky, Michigan, New Mexico, Oregon, Washington and West Virginia—it is clear that states are realizing savings and revenue gains as a result of expansion.

  • Savings and revenues by the end of 2015 (just 1.5 years into expansion) are expected to exceed $1.8 billion across all eight states
  • In Arkansas and Kentucky, savings and revenue gains are expected to offset costs of the expansion at least through SFY 2021

Findings from these eight states suggest that every expansion state should expect to:

  • Reduce state spending on programs for the uninsured
  • See savings related to previously eligible Medicaid beneficiaries now eligible for the new adult group under expansion
  • See revenue gains related to existing insurer or provider taxes

Does this mean that states who failed to expand Medicaid are stupid? The answer is no. It was clear to all states that expanding Medicaid would increase federal government funding and decrease the need for state funds. Clearly, the ACA Medicaid expansion was a short-run fiscal win.

In the long-run, however, there is a risk that federal generosity for the Medicaid expansion decreases and states are left holding the bag. Poorer states with a larger Medicaid population would be at significant financial risk in this case.

Of course, there are the politics of Medicaid expansion, but whether or not states should or should not expand Medicaid is a question that cannot yet be answered.


Leave a Reply

Your email address will not be published. Required fields are marked *