Medicaid Expansion's Creeping Costs to States

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Medicaid Expansion's Creeping Costs to States Under the Supreme Court’s ruling on the Affordable Care Act, states may choose to expand their Medicaid populations to include individuals below 138 percent of the federal poverty level, with the federal government picking up 100 percent of payments for the first three years and then rolling back federal payments. This structure is designed to be attractive to the states, since it appears to increase health coverage at little or no state-level cost. However, the expansion would be very expensive to states as early as 2019. In his fiscal year 2013 budget, President Obama has already proposed reducing the federal match rate on the expansion. Many states are already struggling with Medicaid spending. The blended rate proposed in the Administration’s budget would make matters worse, costing states up to $3.4 billion a year. In his new paper, Heritage expert Drew Goronshowski explores the impact of a number of match rate reduction scenarios, providing state-by-state breakdowns for each. See the charts and full analysis >> State legislators cannot afford to be myopic when assessing the costs and benefits of expanding Medicaid. Aside from problems already apparent in Medicaid, such as patient access, states must also face uncertainty in how much the expansion will actually cost. The Medicaid expansion represents a giant increase in federal spending of $642 billion, according to the Congressional Budget Office. Instead of adding millions to Medicaid, Washington should reform the program. The Heritage Foundation’s Saving the American Dream does just that. Explore the Heritage plan >> That Terrifying Medicare Voucher Threat No Ducking Medicare Anymore Time for a Serious National Debate About Medicare Reform How Obamacare Robs Medicare and Hurts Seniors Medicare at Risk: Visualizing the Need for Reform   $161 Billion IN EMPLOYER PENALTIES AND INDIVIDUAL MANDATE TAXES BY 2019 Obamacare is "bending the cost curve" up, not down. Find out more >>       About The Heritage Foundation Founded in 1973, The Heritage Foundation is a research and educational institute — a think tank — whose mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense. The Heritage Foundation | 214 Massachusetts Ave NE, Washington, DC 20002 | 202.546.4400 | heritage.org