Medicaid Expansion Report Calculates Modest State Costs

John Commins, for HealthLeaders Media , November 27, 2012

Weil concedes that even a 1% increase in Medicaid spending could prove difficult for a lot of states that are still recovering from the recession. "States have not fully recovered, even though the trend lines now are quite positive in the majority of states," he says. "But it means there is a lot of deferred attention to other priorities like education, infrastructure, and public safety that have been lining up for years. So even though the relative shares are small, the absolute demands on state governments are quite substantial."

Drew Gonshorowski, a policy analyst in the Center for Data Analysis at The Heritage Foundation, says the report is hobbled by "the uncertainty around how much savings you can expect from your uncompensated care reduction at the state level."

"The study is assuming right away a 33% reduction in state spending on uncompensated care for the uninsured as a result of the expansion. They claim that is a lowball estimate but there isn't any research that exists that shows that will be the case, or anywhere near the case," he says. "So ultimately this study hinges on that being true."

Gonshorowski says governors and state lawmakers—who unlike Congress have to balance their budgets every year—should be concerned about the long-term effects of the expansion on their budgets.

"Even in some of the more friendly state-specific estimates on the expansion, a lot of states are seeing cost even as early as 2019," he says. "You have this case where the states see the expansion as a great deal because the federal government is picking up almost all of the bill in the early years. But when the rubber hits the road, they are going to start paying for the expansion in the long run. Then the question is, can the state actually pay for the expansion at that point?"

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