Medicaid Expansion To Cost States $118B by 2023, GOP Report Finds

The Medicaid expansion under the federal health reform law will cost states an estimated $118 billion by 2023, almost twice the $60 billion the Congressional Budget Office estimated, according to a according to a report released on Tuesday by Republicans on the Senate Finance and House Energy and Commerce committees, The Hill's "Healthwatch" reports.

The state-by-state analysis of the financial impact of the overhaul, titled "Medicaid Expansion in the New Health Law: Cost to the States," conflicts with other projections that the expansion ultimately will save states money by 2021 (Pecquet [1], "Healthwatch," The Hill, 3/1).

The health reform law requires states to expand Medicaid eligibility in 2014, adding millions of people to the states' Medicaid programs. The federal government is funding the additional beneficiaries until 2017, but will gradually decrease its contribution to 90% by 2020, with states covering the rest (Winerman, "The Rundown," PBS Newshour, 3/1).

Senate Finance Committee ranking member Orrin Hatch (R-Utah) in a statement said, "With this report, we see the true cost to states, who are already facing a collective $175 billion budget shortfall, of this unsustainable expansion" (Pecquet [1], "Healthwatch," The Hill, 3/1).

Previous Reports

However, several previous reports have found that states would benefit from net savings under the Medicaid expansion. For example:

• an Urban Institute study found that states would see net budget savings of between $40.6 billion and $131.9 billion from 2014 to 2019 because of the reform law;
• a Lewin Group study found that from 2010 to 2019 state and local governments would net $107 billion because of savings in programs serving the uninsured; and
• the Medicare chief actuary estimated that the expansion would reduce state Medicaid costs by $33 billion through fiscal year 2019.

RWJF Report Finds States Would Receive $82.3B in New Federal Money

Meanwhile, a Robert Wood Johnson Foundation report found that states will receive $82.3 billion in new federal money as a result of the Medicaid expansion and exchange subsidies in the overhaul.

The report also notes that the new Medicaid beneficiaries will "have lower associated costs because, on average, they do not have the same health issues" as current beneficiaries. The report estimates that of the 12.3 million new beneficiaries, 10 million will be healthy adults without children.

Distribution of the federal funding to states would vary based on factors affecting both the exchanges and Medicaid, including income distributions and specific medical costs. The report also estimates that the overhaul would decrease the rate of uninsured people nationwide by 10.3%, but the impact on individual states would vary in magnitude (Pecquet [2], "Healthwatch," The Hill, 3/1).