Estimated State Budget Impact of a MaineCare Expansion in 2016

Prepared for the Maine Health Access Foundation

This brief examines the budget implications of expanding MaineCare (Maine’s Medicaid program) and finds that the state savings coupled with the new revenues are sufficient to offset state costs attributable to expansion in calendar year 2016.

MaineCare expansion would cost Maine $17.2 million in calendar year 2016 as a result of both the increased costs of administering the larger Medicaid program and a portion of the costs for parents who would gain eligibility under expansion. At the same time, Maine could expect to see budgetary savings and revenues of $43.9 million, more than sufficient to offset State costs attributable to expansion in 2016. The brief identifies potential savings in two major categories: savings from accessing enhanced federal matching funds for some current MaineCare enrollees, and savings from replacing State General Funds with Medicaid funds. In addition, Maine could expect increasing provider tax revenues; as provider Medicaid revenues increase with expansion, this would translate into additional tax revenue for the State.

The brief estimates expansion-related budget impacts only for calendar year 2016, assuming Maine expands MaineCare on or before October 1, 2015. In all cases, the authors developed conservative assumptions in an effort to err on the side of overestimating costs and underestimating savings. To develop estimates of costs, savings and revenue gains, the authors relied on public data sources of current State expenditures for MaineCare and programs and services for the uninsured, discussion with MaineCare stakeholders, and results from states that have already expanded Medicaid.

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