States Expanding Medicaid See Significant Budget Savings and Revenue Gains

A doctor takes on notes on a tablet during a patient check up.

Evidence from states that have expanded Medicaid consistently shows that expansion generates savings and revenue which can be used to finance other state spending priorities or to offset much, if not all, of the state costs of expansion.

 

The Issue

The Affordable Care Act (ACA) gave states the option to expand Medicaid to adults up to 138 percent of the federal poverty level. This report, an update to an April 2015 brief, shows new results from states that have expanded along with the impact this decision has had on state budgets.

Key Findings

Data from 11 states—Arkansas, California, Colorado, Kentucky, Michigan, New Mexico, Oregon, Maryland, Pennsylvania, Washington state, and West Virginia—and the District of Columbia suggests that expansion states should expect to see:

  • Reduced state spending on programs for the uninsured

  • Savings related to previously eligible Medicaid beneficiaries now eligible for the new adult group under expansion

  • Additional revenue from existing insurer or provider taxes

  • Beyond state budget benefits: Medicaid expansion states are seeing broader benefits, including job growth, deep reductions in uninsurance, and related decreases in hospital uncompensated care costs

Conclusion

As a result of Medicaid expansion, states continue to report financial benefits through savings and revenue gains. These budget savings and gains can be used for other state priorities or, starting in 2017, can help offset the state costs of expansion.

About the Grantee

The State Health Reform Assistance Network (State Network) is a Robert Wood Johnson Foundation program dedicated to providing technical assistance to states in order to maximize coverage expansions under the Affordable Care Act (ACA).