States Expanding Medicaid See Significant Budget Savings and Revenue Gains

Prepared for the State Health Reform Assistance Network

In a report prepared for the State Health Reform Assistance Network, Manatt highlights key ways in which eight states—Arkansas, Colorado, Kentucky, Michigan, New Mexico, Oregon, Washington and West Virginia—were able to realize savings and revenue gains as a result of Medicaid Expansion. Savings and revenues by the end of 2015 (just 1.5 years into expansion) are expected to exceed $1.8 billion across all eight states. Findings from the eight states suggest that every expansion state should expect to:

  • Reduce state spending on programs for the uninsured.
  • See savings related to previously eligible Medicaid beneficiaries now eligible for the new adult group under expansion.
  • See revenue gains related to existing insurer or provider taxes.

Savings and increased revenue seen in expansion states fall into three major categories: state savings from accessing enhanced federal matching funds; state savings from replacing general funds with Medicaid funds, and revenue gains (with most states seeing the assessments or fees they place on providers and plans grow as provider and plan revenues increase with expansion).