Governors around the country are deciding whether they can afford to expand Medicaid under the Affordable Care Act.
If all governors agree, new projections by The Urban Institute and Kaiser Family Foundation show there will be a net savings of $10 billion for state governments in the upcoming decade. That is largely because uncompensated care costs would offset higher Medicaid spending, according to the report.
But the calculus varies greatly from state to state.
Delaware, one of the few states that has already opted in to the Medicaid expansion, is one winner in this equation. After factoring in savings for uncompensated care, the First State could save $1.1 billion over a decade.
Kaiser’s Robin Rudowitz said that is because Delaware expanded eligibility requirements above federal minimums years ago.
“Right now, under the current Medicaid programs, Delaware provides coverage to both parents and adults without dependent children, up to at least 100 percent of the poverty level,” Rudowitz said.
When the health law is fully implemented, the U.S. government will pick up more of the tab for those individuals.
“So from where they are, that provides a savings for a state like Delaware,” Rudowitz said.
New Jersey is on the opposite end of the spectrum, with projected costs of $1.2 billion with an expansion. And Pennsylvania? Almost $2 billion over 10 years, even after accounting for savings.
“Pennsylvania has not expanded to adults whereas other states have,” said Ann Bacharach with the Pennsylvania Health Law Project.
“If you’re a single, childless adult, there is not much that the state can offer in terms of coverage,” Bacharach said.
So the new enrollees covered by an expansion would add costs, but the federal contribution would not provide the same savings in Pennsylvania as it will in Delaware.
Last week, Pennsylvania Gov. Tom Corbett estimated expanding Medicaid would cost more than the authors of the new report did; he forecast more than $4 billion by 2021. He told reporters that in a tight budget year, “we have to look at the costs.”
The Urban Institute report stressed that Medicaid expansion is actually only a small part of growing costs to the program.
More significant in the projections were costs associated with higher enrollment due to mandatory portions of the Affordable Care Act, including a simplified application and enrollment process.