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Health Reform and State Budget Savings

Earlier this month, the Urban Institute released a new report analyzing some of the fiscal effects of the Affordable Care Act on state budgets.

The authors found that, although the federal legislation will require states to increase their spending on Medicaid coverage for low-income adults, those additional state costs will be greatly outweighed by savings in several areas, most significantly:

(1) shifting some of today’s higher-income Medicaid adults into the Exchange, where the federal government is responsible for 100% of their subsidies; and

(2) substituting newly available federal Medicaid dollars for current state and local spending on uncompensated care furnished to the uninsured and on mental health services provided to low-income residents.

On balance, the authors concluded that during 2014 – 2019, total states’ savings will exceed states’ costs by between $40.6 billion and $131.9 billion.

For more, be sure to read the whole report.

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