Cost and Coverage Implications of the ACA Medicaid Expansion: National and State by State Analysis Report Authors: John Holahan, Matthew Buettgens, Caitlin Carroll, and Stan Dorn Urban Institute November 26, 2012 FIGURE 1 Objectives of the Study Estimate the effect, by state, of the ACA Medicaid expansion with all states implementing the expansion compared to no ACA on federal and state spending and coverage of current and new eligibles Estimate the implications if the ACA is implemented but no states adopt the Medicaid expansion and then estimate incremental effects, by state, of the decision to expand Medicaid on: federal and state Medicaid spending state spending for uncompensated care and provider reimbursement state fiscal effects relative to current general fund expenditures Estimate the effect, by state, of state decisions to adopt the Medicaid expansion combined with other provisions of the ACA on Medicaid enrollment and the number of uninsured 1
FIGURE 2 Methods Develop a pre ACA baseline for each state, based on CBO projections and state expenditure data Estimate the ACA s state by state impact with no state expanding Medicaid and with all states expanding Medicaid, using the Urban Institute Health Insurance Policy Simulation Model (HIPSM) ; the model incorporates pre ACA eligibility rules for each state Participation rates result from model estimates of individual behavior and are consistent with published research Cost of coverage depends on individual characteristics such as health status, previous characteristics and state; overall estimates of federal expenditures are close to CBO s Federal matching rates depend on ACA provisions: standard FMAP for new enrollment among current eligibles, higher ACA rates for new eligibles and higher match rate for CHIP eligibles We estimate savings to states with limited benefit programs whose recipients become new eligibles and states with prior expansion programs that receive enhanced matching rates FIGURE 3 State Estimates will Vary Due to Limitations in this Study While HIPSM uses two years of Current Population Survey data, sample sizes can be somewhat small in some states Several sources of savings to states cannot be estimated with 50 state data: Savings from no longer covering certain adults with incomes above 138% of the federal poverty line (FPL), who could be moved from Medicaid into exchange Savings on certain adults with incomes at or below 138% of the FPL, such as the medically needy, who could now be covered as new eligibles, with higher federal matching payments Savings on non Medicaid health care (e.g., state mental health) for the uninsured who newly qualify for Medicaid Additional state revenue that results from, e.g., the effect of new federal expenditures on the state economy 2
FIGURE 4 Total State and Federal Medicaid Spending Under ACA with All States, 2013 2022 $ in billions: Baseline Federal Spending, No ACA $3,659 Baseline State Spending, No ACA $2,680 New State Spending under ACA $76 New Federal Spending under ACA $952 Total New Medicaid Spending under ACA: $1,029 Billion Total Medicaid Spending Over the Decade: $7,368 Billion Note: Individual components may not sum to totals due to rounding. Source: Urban Institute estimates prepared for the Kaiser Commission on Medicaid and the Uninsured, October 2012. FIGURE 5 New State and Federal Medicaid Expenditures under ACA, with All States and No States, 2013 2022 $ in billions: $952 State Federal $800 $76 $68 $152 $8 ACA with All States ACA with No States Incremental Impact of Medicaid Expansion Source: Urban Institute estimates prepared for the Kaiser Commission on Medicaid and the Uninsured, October 2012. 3
FIGURE 6 New Federal and State Spending on Current and New Eligibles Under the ACA with All States, 2013 2022 Federal State Current New Total $221.5 $26.5 $730.9 $50.0 $952.5 $76.5 Total = $248.0 billion Total = $780.9 billion Total = $1,028.9 billion Source: Urban Institute estimates prepared for the Kaiser Commission on Medicaid and the Uninsured, October 2012. FIGURE 7 Impact of the Incremental Adoption of the Medicaid Expansion on Federal and State Expenditures, 2013 2022 U.S. New England Federal State Total Middle East West 34.5% 21.0% 12.3% 11.1% 14.6% 23.3% 26.2% 26.2% 19.8% 17.5% 3.8% 5.7% 4.5% 4.6% 3.5% 0.3% 4.6% 4.2% SOURCE: Urban Institute estimates prepared for the Kaiser Commission on Medicaid and the Uninsured, October 2012. NOTE: Selected Regions Displayed: The New England region includes CT, ME, MA, NH, RI, and VT. The Middle region includes DE, DC, MD, NJ, NY, and PA. The region includes FL, GA, NC, SC, VA, and WV. The East region includes AL, KY, MS, and TN. The West region includes AR, LA, OK and TX. 4
FIGURE 8 Change in State Medicaid Expenditures Under the ACA With All States Expanding Compared to No States, 2013 2022 WA OR ID NV UT CA AZ AK VT MT ND MN WI NY SD MI WY PA IA NE IN OH IL CO WV VA KS MO KY NC TN OK AR SC NM MS AL GA TX HI US Total: 0.3% LA FL 11% to 0% (10 states) >0% to 2% (12 states, including DC) >2% to 4% (17 states) >4% to 7% (12 states) ME NH MA RI CT NJ DE MD DC Source: Urban Institute estimates prepared for the Kaiser Commission on Medicaid and the Uninsured, October 2012. FIGURE 9 Net State Fiscal Impact of Medicaid Expansion, Including State Savings in Uncompensated Care Costs, 2013 2022 $ in millions: $8,238 $10,072 Incremental Change in Medicaid Spending Due to Expansion $18,310 Change in State Spending on Uncompensated Care Due to Expansion Net Change in State Spending Due to Expansion Source: Urban Institute estimates prepared for the Kaiser Commission on Medicaid and the Uninsured, October 2012. 5
FIGURE 10 Impact of the Incremental Adoption of the Medicaid Expansion on State Expenditures, 2013 2022 0.3% U.S. Change in State Medicaid Expenditures Change in State Expenditures on Medicaid and Uncompensated Care Combined New England Middle East West 4.5% 4.6% 3.5% 3.1% 2.9% 2.5% 0.4% 4.6% 4.2% 4.8% 4.4% SOURCE: Urban Institute estimates prepared for the Kaiser Commission on Medicaid and the Uninsured, October 2012. NOTE: Selected Regions Displayed: The New England region includes CT, ME, MA, NH, RI, and VT. The Middle region includes DE, DC, MD, NJ, NY, and PA. The region includes FL, GA, NC, SC, VA, and WV. The East region includes AL, KY, MS, and TN. The West region includes AR, LA, OK and TX. FIGURE 11 Incremental Impact of the Medicaid Expansion on State Medicaid Expenditures Relative to General Fund Expenditures, 2013 2022 State Medicaid Expenditure Net State Expenditure U.S. New England Middle East West 0.1% 1.2% 1.2% 1.1% 0.8% 0.8% 0.8% 0.1% 1.1% 1.2% 1.8% 1.9% SOURCE: Urban Institute estimates prepared for the Kaiser Commission on Medicaid and the Uninsured, October 2012. NOTE: Selected Regions Displayed: The New England region includes CT, ME, MA, NH, RI, and VT. The Middle region includes DE, DC, MD, NJ, NY, and PA. The region includes FL, GA, NC, SC, VA, and WV. The East region includes AL, KY, MS, and TN. The West region includes AR, LA, OK and TX. 6
FIGURE 12 Medicaid Enrollment Under ACA With and Without Medicaid Expansion, 2022 No ACA Baseline Medicaid Enrollment New Medicaid Enrollment 5.7 21.3 52.4 52.4 52.4 No ACA Baseline ACA with No States ACA with All States Source: Urban Institute estimates prepared for the Kaiser Commission on Medicaid and the Uninsured, October 2012. FIGURE 13 Number of Uninsured With and Without ACA and Medicaid Expansion, 2022 Number of Uninsured Reduction in Uninsured 28% reduction in # uninsured 15.1 48% reduction in # uninsured 25.3 53.3 38.2 28.0 No ACA Baseline ACA with No States ACA with All States Source: Urban Institute estimates prepared for the Kaiser Commission on Medicaid and the Uninsured, October 2012. 7
FIGURE 14 Percentage Reduction in Uninsured Under the ACA With All States Expanding and No States, 2022 28.3% U.S. 47.6% New England 23.7% No States Expand Medicaid 39.5% Middle 41.5% 28.4% 29.1% All States Expand Medicaid 51.4% 30.9% East 58.3% West 34.0% 52.9% SOURCE: Urban Institute estimates prepared for the Kaiser Commission on Medicaid and the Uninsured, October 2012. NOTE: Selected Regions Displayed: The New England region includes CT, ME, MA, NH, RI, and VT. The Middle region includes DE, DC, MD, NJ, NY, and PA. The region includes FL, GA, NC, SC, VA, and WV. The East region includes AL, KY, MS, and TN. The West region includes AR, LA, OK and TX. FIGURE 15 Summary If all states implement the ACA Medicaid expansion, the federal government will fund the vast majority of the increased Medicaid costs. If all states implement the expansion, gains in Medicaid coverage would substantially reduce the number of uninsured Due to other provisions in the ACA, states will face increased enrollment and spending even if they do not implement the Medicaid expansion The additional state cost of implementing the Medicaid expansion is small relative to total state spending without the expansion and relative to large increases in federal funding Accounting for reductions in spending on uncompensated care, states as a whole are likely to see net savings from the Medicaid expansion States may be able to achieve other savings that could not be accounted for in this report using 50 state data 8