The New Health Dialogue

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Starting in 2014, the new health reform law will expand Medicaid coverage to most of the population below 133 percent of federal poverty level, amounting to about 15.9 million newly eligible enrollees by 2019. In a new report from the Kaiser Family Foundation, John Holahan and Irene Headen of the Urban Institute crunch the numbers and provide a state-by-state breakdown of what the Medicaid expansion means to states -- and their budgets.

The expansion is great news for the millions of low-income Americans (including childless adults) in need of health care. By 2019, there will be a 45 percent reduction in the number of uninsured adults under 133 percent FPL. Cash-strapped states might have mixed feelings about the expansion, but there is some good news for them -- the federal government will pick up the tab for covering the newly eligibles. For the first three years, the federal government will pay 100 percent of the costs, and in subsequent years, the federal government’s share will phase down to 90 percent of the cost of extending coverage. All told, between 2014 and 2019, the federal government will pay out an average of $443.5 billion (about 95 percent of the total cost), while states will contribute $21.2 billion.

So who gets the best deal? According to the report, states who currently have more limited coverage and higher uninsurance rates (like Texas, California and Florida) will get the most money because they face a larger coverage expansion. On the other hand, states such as Massachusetts, who have already worked to extend coverage and have very low uninsurance rates won’t get a lot of money from the government. In fact, as the report shows, many of the states that are most opposed to health reform (vowing to fight and repeal the law in any way they can) are those whose residents -- and budgets -- stand to gain the most from the coverage expansion.

The report examined two scenarios for Medicaid expansion: the ‘standard’ scenario, which approximates uniform participation and enrollment rates based on CBO calculations, and the ‘enhanced’ scenario, that explores what would happen if states get on board with the coverage expansion and perform outreach to try and enroll as many people as possible. Under the enhanced scenario, (meaning all states would have to play along) Medicaid enrollment could increase by 22.8 million by 2019 -- which represents an impressive 70 percent reduction of uninsured adults under 133 percent FPL. Given this expansion rate, the government could end up spending up to $532 billion, and states could spend up to a total of $43 billion by the end of the decade. In the enhanced scenario, the government’s share of the cost declines slightly, as the researchers assume enhanced outreach could encourage those who are already eligible to enroll -- and the government is only paying for the newly eligible.

Kaiser rolled out the report at a briefing earlier today. To see what your state stands to gain, check out the report summary here.