This report finds that state governments are likely to spend $92-129 billion less from 2014 to 2019 with implementation of the Affordable Care Act (ACA), thanks to provisions designed to reduce the uninsured population and increase federal support for health care functions previously financed by states. Funded by the Robert Wood Johnson Foundation, Urban Institute researchers used their Health Insurance Policy Simulation Model to estimate federal and state spending and savings as more Americans gain access to affordable health care. They find:
Overall, the federal government would spend $704 to $743 billion more under reform and states would spend $92 to $129 billion less. Even after 2019, when the federal government’s share of Medicaid costs declines to its permanent level, states will still come out ahead, realizing net savings in 2020 alone of $12 to $19 billion.
Report authors Matthew Buettgens, Stan Dorn and Caitlin Carroll note that costs and savings will differ significantly across states because of varied Medicaid eligibility rules, the characteristics of the currently uninsured, and other factors.