Medicaid Expansion States Are Saving Money

Health reform’s Medicaid expansion has produced significant state budget savings, two new reports covering five states show. Savings are expected to continue — and grow — in coming years. These reports provide strong evidence that claims that the expansion will harm state budgets are misplaced.

Expanding Medicaid saved Arkansas and Kentucky nearly $31 million and $26 million, respectively, in just the first six months of 2014, according to a report prepared for the Robert Wood Johnson Foundation. They expect to save $89 million and $84 million this fiscal year, which ends June 30. What’s more, the report found that these states will continue to accumulate savings that will cover all costs related to the expansion through the end of the decade, even as the federal share of those costs phases down from 100 percent to 90 percent by 2020.

Arkansas and Kentucky have achieved these savings in areas available to all states. For example, as more people have gained health insurance, fewer have needed state-funded mental health and behavioral health programs that serve the uninsured. And both states have moved people who previously received care under specialized Medicaid categories for disabled adults and women with breast and cervical cancer into the expansion’s new eligibility group, for which the federal government is paying the entire cost.

Connecticut, New Mexico, and Washington State are also enjoying budget savings from their Medicaid expansions, a separate report from the Kaiser Family Foundation found.

In addition, Arkansas, Kentucky, New Mexico, and Washington State are collecting more revenue from taxes on the providers and managed care plans that serve the newly insured, the reports show.