Report Estimates Cost of Not Expanding Medicaid

An August 2016 policy brief released by the Urban Institute – The Cost to States of Not Expanding Medicaid – estimating the economic impact of a state’s decision not to expand Medicaid. The report addresses the following questions:

  • How would the caseload increases that result from expansion affect state Medicaid costs and federal Medicaid funding in states that have not yet expanded coverage?
  • With expansion, most adults with incomes between 100 percent and 138 percent of FPL would no longer qualify for premium tax credits and cost-sharing reductions (i.e., subsidies) in health insurance marketplaces. How much in federal subsidies would states lose if they expanded Medicaid?
  • Expansion would reduce the number of uninsured. How would that affect uncompensated care costs? What  would the resulting savings equal for the federal government and states?
  • Before Medicaid expansions began in 2014, net state budget gains were projected by every state-specific comprehensive analysis—that is, every analysis that examined increased state costs from higher caseloads, reduced non-Medicaid spending on health care for the uninsured poor, higher federal matching rates for some beneficiaries who would have participated in Medicaid without expansion, and revenue increases. Now that expansion has gone into effect, what state fiscal effects have been observed?

Key findings from the analysis included:

  • higher caseloads would increase state Medicaid spending by $75.9 billion to $83.5 billion,
  • caseload growth would increase federal Medicaid funding by $568.5 billion to $634.5 billion,
  • federal subsidies in health insurance marketplaces would fall by $129.1 billion, and
  • reductions in uncompensated care would save states $21.8 billion to $27.1 billion while lowering federal spending by $34.9 billion to $43.3 billion.

Download the full report.