Dive Brief:
- Medicaid expansion does not just benefit new program beneficiaries, but also the states offering it, suggests a new study by the Robert Wood Johnson Foundation and the Urban Institute.
- The study concluded that for every $1 a state spends on expansion, it draws down $7 to $8 in federal funding.
- Furthermore, that federal funding has led to net budgetary gains in every expansion state that has analyzed the impact, according to the report’s authors, due to factors including increased economic activity and reduced spending on other programs for the poor/uninsured.
Dive Insight:
The researchers concluded that Medicaid expansion makes economic sense for states, because of the 14 expansion states with relevant analyses, all found that it has so far yielded net budget gains. Of the 10 states that can project their results forward to 2020 or beyond, eight appear likely to continue to see positive fiscal results throuought that time, they added.
"For most states with relevant analyses, net budget gains are expected for the foreseeable future, even after states begin paying 10 percent of expansion costs," the report stated.
The 14 analyses were for Arkansas, Alaska, California, Colorado, the District of Columbia, Kentucky, Maryland, Michigan, New Jersey, New Mexico, Oregon, Pennsylvania, Washington, and West Virginia.
The two states projected to see net budget losses were New Mexico beginning in state fiscal year 2020–2021, and Alaska beginning in federal fiscal year 2017. The authors noted Alaska lacks sales or individual income taxes, creating fiscal conditions that do not apply to the 19 remaining non-expansion states.
The authors argue that if all those remaining states were to expand their Medicaid programs now, they would see a combined federal funding increase of as much as $462 billion for a cost of just $56 billion. Meanwhile, the federal government would see some savings as well, being projected to spend $43 billion less on uncompensated care and $129 billion less on marketplace subsides, the authors found.
“It appears that Medicaid expansion is a fiscal win for states,” RWJF's Kathy Hempstead stated. “In addition to increasing coverage, expansion has the potential to reduce state expenditures, generate revenue, and create jobs.”