Financial Impact of Reform on the States

by Rebecca Farley on October 20, 2010

The Urban Institute has released a brief which takes an in-depth look at the financial impact the main components of the Patient Protection and Affordable Care Act (PPACA) will have on state governments.

The Urban Institute estimates that there will be modest increases in state spending on Medicaid ranging from 21.1 billion to 43.2 billion from 2014-2019, an increase in spending of 1.2 to 2.9 percent relative to what states would pay without reform. It is estimated that PPACA will cut net state spending on Medicaid and CHIP by $33 billion and that an additional $70 billion or more could result from shifting state funded uncompensated care into federally matched Medicaid.

The overwhelming share of spending on newly eligible beneficiaries will be covered by the federal government. Currently, states spend about $17.2 billion a year on the uninsured. PPACA will help states shift some of this spending into federally matched Medicaid and move some Medicaid beneficiaries into the health insurance exchanges.

The brief also discusses the impact of health reform on states that have already expanded coverage to childless adults through Section 1115 waiver programs.

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