Medicaid Expansion: Framing and Planning a Financial Impact Analysis

The Supreme Court’s decision in NFIB v. Sebelius did not change the underlying Medicaid expansion provisions of the Affordable Care Act (ACA), but did remove the ACA’s enforcement authority for states choosing not to expand. As a result, states are facing an unexpected and difficult implementation decision regarding this expansion. The availability of 100 percent federal match for this population from 2014 through 2016, along with federal match staying at 90 percent in the later years, is, for many states, a strong incentive to expand Medicaid. Regardless of that incentive, most states are taking a measured and analytical approach to determining the fiscal impact of this choice before making a final decision.

This report serves as a guide for states considering their own Medicaid expansion analysis.The analysis in this report is limited to financial considerations related to a state’s decision to expand and therefore excludes many important financial aspects related to the ACA as a whole (e.g. remaining mandatory provisions).

There are six main areas of financial analysis that all states should consider that are included in this report:

1. Cost of newly eligibles
2. Cost of currently eligible but not enrolled
3. Administrative costs
4. Savings from transitioning current Medicaid populations to newly eligible group
5. Savings from reduction in state programs for the uninsured
6. Other revenue gains and savings.