States That Expanded Medicaid Report Savings, Revenue Gains

A study of 8 states that chose to expand Medicaid coverage under the Affordable Care Act found budget savings of $1.8 billion as well as revenue gains by the end of 2015, just one-and-a-half years into expansion.

The Robert Wood Johnson Foundation prepared a report on Arkansas, Colorado, Kentucky, Michigan, New Mexico, Oregon, Washington, and West Virginia, and determined that every expansion state should expect to reduce spending on programs for the uninsured while seeing savings related to previously eligible Medicaid beneficiaries who are now eligible the new adult group under expansion.

“As a result of Medicaid expansion, states have seen budget savings and revenue gains without reducing services,” the authors wrote. “In some states, budget savings could offset the cost of expanding Medicaid through 2021.”

Colorado saved $136.6 million in 2014 and expects to save $148.4 million in 2015, and Washington expects savings of $11.5 million in state fiscal year 2014 and $35 million in state fiscal year 2015.

Arkansas, Michigan, New Mexico, and Washington increased state revenue from existing assessments on insurers. The report determined that all states with insurer or provider taxes can expect to see revenue gains as a result of Medicaid expansion.

The report also found savings from behavioral health programs as individuals who had been relying on state-funded mental health and behavioral health programs and services can now secure Medicaid coverage in the new adult group. As a result, states can fund those services with federal money without having to reduce any of the services offered. Overall, the 8 states analyzed saved $472 million through state fiscal year/calendar year 2015.

Meanwhile a new report from the Urban Institute, found that in states that chose to expand Medicaid, coverage increased 19.1%, which represents a 53.4% decline in the uninsured rate between September 2013 and March 2015. Coverage increases were smaller in nonexpansion states, but coverage of low-income adults still increased 12.5%.

“Of the 22 states that have yet to expand Medicaid, only a handful appear to be actively debating whether to expand,” the authors concluded. “Therefore, it is likely that the coverage gap between expansion states and nonexpansion states found here will persist, at least in the near future.”