In addition to big gains in health coverage, states that expand their Medicaid programs generate substantial budget savings and revenue gains that can be used to offset expansion costs and finance other state priorities.
A recent analysis by Manatt Health, prepared for the State Health Reform Assistance Network, examined the budget impact of Medicaid expansion in 11 states and the District of Columbia. The study reinforces the findings of an earlier analysis and continues to show that states that expand Medicaid can expect to:
- Reduce state spending on programs for the uninsured;
- Achieve savings related to previously eligible beneficiaries now covered under expansion; and
- Bring in additional revenue from existing insurer and provider taxes.
Expansion also brings hundreds of millions of new federal dollars to states, which ripples through the economy, creates jobs, and strengthens struggling rural hospitals. Evidence shows that:
- State Medicaid spending grows more slowly in expansion states. Medicaid spending in expansion states grew by half as much as spending in non-expansion states from FY 2014 to FY 2015 (3.4% compared to 6.9%).
- Expansion states see more job growth in the health sector. States that expanded Medicaid in January 2014 experienced average job growth of 2.4% in 2014, while jobs in states that did not expand grew by only 1.8% during that same year.
- Uncompensated care has dropped more rapidly in expansion states. In 2014, hospitals in expansion states experienced a reduction in uncompensated care costs of 26%, compared to a 16% reduction in non-expansion states.
- The percentage of rural hospitals at risk of closure is twice as high in non-expansion states compared to states that have expanded their Medicaid programs.
The evidence of the positive budget and economic impacts of expansion continues to grow. Kansas, which faces ongoing budget shortfalls, can expect these same results if we choose to expand KanCare, our state Medicaid program.