New Data Shows Medicaid Expansion Is a Solid Budget Decision for States

New data shows states that have expanded Medicaid have already experienced significant revenue gains and savings. A recent report by the State Health Reform Assistance Network examined eight states that have expanded Medicaid since 2013 and found that increased coverage has created savings and revenue that will exceed $1.8 billion by the end of this year.

Based on these findings, other states considering Medicaid expansion, like Montana, could expect similar results including greater savings from increased federal funds and decreased state costs associated with uninsured populations and revenue gains from increased enrollment.

Seven out of eight states that expanded Medicaid witnessed savings from increased federal matching funds. Prior to expansion, states had to cover up to 50% of healthcare bills for “high need” individuals like those with disabilities. With expansion, these individuals can now receive full Medicaid coverage, which means the federal government will pick up the bill from 2015-2016, and at least 90% of the coverage costs after that. Since 2013, the state of Washington has saved $342 million as a result of enhanced federal matching funds.

As a result of this higher federal match, states reduced spending associated with uninsured populations. In the past, states used general fund dollars to fund programs for uninsured groups, including those in corrections and public health programs. Again, under expansion, the federal government will cover these costs. In Kentucky, Medicaid expansion reduced the rate of uninsured from 20.4% to 11.9% in the first half of 2014. Additionally, reduced spending on uninsured populations and things like mental and behavioral health is expected to save the state $21 million by the end of 2015. States that have expanded health care coverage are also seeing greater revenue, which can be invested in programs that are critical to communities.

For those states studied, savings and revenue gains will offset the costs associated with expanding Medicaid. For example, reduced spending and increased revenue are projected to offset expansion costs in Kentucky through to 2021.

Policymakers should look closely at this new study. Montana has a lot to gain by expanding health care coverage. It will not only bring affordable healthcare to 70,000 individuals, it will have a significantly positive impact on our state’s budget.

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