Federal Government To Bear Brunt of Medicaid Expansion, Study Finds
The federal government will shoulder almost the entire cost of the Medicaid expansion established in the new health reform law, according to a recent Kaiser Family Foundation study, the Washington Post reports.
The findings counter concerns that the expansion would harm states' fiscal health, which some governors and state officials have used to partially justify lawsuits against the overhaul.
The expansion -- set to begin in 2014 -- would increase the nationwide eligibility threshold for the program to 133% of the federal poverty level, which is $14,400 for a single adult or $29,300 for a family of four. The law states that the federal government will pay 100% of the cost of covering all newly eligible people through 2016 and pay 90% through 2020.
The study forecasts that the overall federal share of the Medicaid expansion will be between 92% and 95% from 2014 through 2019. According to the study, federal spending on Medicaid overall will increase by 22% during those years, while state spending on the program will increase by just 1.4%.
The study also found that states that have previously limited Medicaid enrollment will see dramatic increases to their Medicaid population, but the federal government will mostly cover the cost of these newly eligible residents. Conversely, states that have worked to expand Medicaid in recent years will see little change under the new law.
The study assumed a relatively low enrollment rate by those who will be eligible in 2014. However, the study also included projections assuming larger enrollment and found that higher participation in the program still would produce only small increases in state spending.
Study co-author John Holahan said the small increase in state costs also could be canceled out by savings from no longer needing to subsidize the care of uninsured people (MacGillis, Washington Post, 5/27).
Costs for California
The study predicts that the health reform law could spur as many as 2.3 million additional residents to enroll in Medi-Cal, California's Medicaid program. Medi-Cal currently covers aboutÂ seven million residents.
Earlier this year, Gov. Arnold Schwarzenegger (R) estimated that California would need to spend an additional $2 billion to $3 billion annually once the reform lawÂ is fully implemented.
Although the new study does not address the governor's estimates, it forecasts a lighter burden for California. The report estimates that California would need toÂ spend between $3 billion and $6.5 billion over a six-year period to cover the state's share of the Medicaid expansion (Zapler, San Jose Mercury News, 5/26).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.