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New Report: Changes in Federal and State Spending Due to ACA

A new report from the Urban Institute outlines state savings as a result of ACA over the next decade. The report details how the overall state savings due to ACA will outweigh the costs. Here are some overall highlights:

  • Between 2014 and 2019, the federal government will spend $704-$743B more with ACA than they would without it and states will spend $92-$129B less (when the feds pick 100% of the cost of newly eligibles from 2014-2017, 94% in 2018 and 93% in 2019)
  • After 2020, net annual state savings will be $12B-$19B (when the feds reduce their share of cost for newly eligibles to 90%)
  • As a result of elimination of Medicaid eligibility for certain adults with incomes above 138% (including discontinued eligibility through the ยง1115 Waiver whose higher income beneficiaries will move into the Exchange), states will save $69B and the federal government will save $89B between 2014 and 2019.
  • By reducing the uninsured population, both the federal government and states halve their spending on uncompensated care.

Changes in spending specific to California:

  • Federal spending on Medi-Cal will increase by $47B and California spending will increase by $6B between 2014 and 2019.
  • The federal government will spend $46B on subsidies for the California Health Benefit Exchange.
  • Both federal and California state spending due to the elimination of Medi-Cal eligibility for those over 138% FPL would decrease by $2.1B.
  • ACA will reduce federal spending on uncompensated care in California by $4B-$8B and reduce state spending by $2.6-5.3B.
  • Overall, the federal government will spend between $84-$88B more on California, while the state will either save as much as $1.3B or spend as much as $1.4B more.

It is important to note that these calculations do not include savings on state and local mental health spending for the uninsured due to the lack of state level data.