How Will Health Reform Affect State Budgets?

by Rebecca Farley on March 7, 2011

As states continue to experience shortfalls as a result of the recession, some are arguing that health reform places an untenable burden on state budgets. A multitude of analyses show differing impacts on states – but how will reform really affect state budgets?

A new report from the Kaiser Family Foundation offers a comprehensive review of the studies on state budget impacts, explaining why they vary so widely and what conclusions we can draw about the fiscal impact of health reform on the states. According to  the report’s authors:

A review of the state estimates and other materials shows that, while the ACA’s obligations impose a number of substantial new costs on states, states also have opportunities to achieve major savings and some new revenues as health reform is implemented. States have included more cost elements than savings elements in their estimates, which may make sense as a matter of prudence in forecasting, but which makes the costs to states look higher than they are likely to be in practice…Ultimately, the effect of ACA on state budgets depends heavily on how individual states choose to implement the law.

To read State Budgets Under Federal Health Reform: The Extent and Causes of Variations in Estimated Impacts, including examples from states that have experienced cost increases and/or savings, click here.

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