More Evidence that Medicaid Expansion Helps State Budgets

Recently, Kaiser Family Foundation released a report on Medicaid Enrollment & Spending Growth for FY 2015 and 2016. There is a lot of interesting data in the report, but the stand out finding confirms what we already know: Medicaid expansion is good for state budgets and leads to increases in coverage.

Medicaid Enrollment is up

Across all states, Medicaid enrollment and spending increased significantly in FY2015 largely due to the ACA and coverage expansions. On average the increase in Medicaid enrollment was 13.8%. Much of this can be attributed to states that participated in Medicaid expansion. Expansion states saw an average enrollment increase to the tune of 18%, whereas non-expansion states saw more modest growth in enrollment at 5.1%. The increase in enrollment in non-expansion states remains encouraging; as it suggests that the welcome mat effect is still at play getting previously eligible but unenrolled adults and children covered!

What about state budgets?

While all states experienced increases in Medicaid enrollment and spending, it is noteworthy that expansion states’ state spending increased only by 3.4% while state spending in non-expansion states was more than double this amount at 6.9%. The federal match rate for expansion states accounts for this cost difference. It is important to keep in mind that expansion states have a much larger Medicaid enrollee population, which accounts for the increase in total Medicaid spending. Still, state general fund Medicaid spending across all states grew at a more modest level in FY 2015 than the total Medicaid spending and Medicaid enrollment growth. Another interesting finding shows that among the 20 non-expansion states in FY 2016, Medicaid enrollment on average is projected to increase by 2.8% and total Medicaid spending is expected to increase on average by 3.6%; providing further evidence that Medicaid expansion would create significant budget savings in states that choose to accept federal funding.


Medicaid Expansion States

In addition to the health benefits of Medicaid coverage for expansion populations, states that participated in Medicaid expansion enjoyed fiscal benefits and savings as well. Over two-thirds of expansion states reported that per member per month costs for the expansion population were at or below projections. Moreover, Kaiser reports that “early evidence from some expansion states show that additional federal Medicaid dollars can result in savings in state general fund spending both within the Medicaid Budget as well as for other state programs or agencies.” In surveying states about their Medicaid program budgets for FY2015 and FY2016, KFF found that thirteen states reported savings in areas of behavioral health; six states found savings related to uncompensated care, fifteen states reported savings related to criminal justice due to expansions, and twelve states had increased revenues due to the expansion. I encourage Say Ahhh! Readers to read the report here for a more in-depth analysis of these new found budget benefits. This report reinforces the point that Medicaid expansion is a common sense choice for states in maintaining the health of both its population and its budget.