The Costs Of Health Reform To Vary Widely Among States

The Congressional Research Service (CRS) has compiled the states’ estimates of the costs of complying with the provisions in the health care law and found that the numbers vary drastically depending on the generosity of the existing programs, state decisions about implementation, and the the number of uninsured who sign up for coverage. The federal government has yet to issue regulations surrounding the state exchanges and states can only estimate how many applicants will actually enroll in the expanded Medicaid programs. Below are some of the early projections:

California: low billions of dollars, Florida: $1.2 billion by 2019; Indiana: $3.6 billion; Kansas $621 million; Maryland: Savings of $829 million; Michigan: $200 million; North Dakota: $1.1 billion; Texas: $27 billion;

Ultimately, I’d argue that reform is still a pretty good deal for the states: they will be able to cover a large number of residents at little direct cost. The law provides states with a lot of extra cash, insures more residents and — consequently — allows states to reduce payments they make to support uncompensated care costs. Significantly, the federal government picks up a large part of the tab for these reform. States will receive grants to establish their exchanges and have full federal funding to expand Medicaid for the first two years (with a decreasing contribution thereafter). The federal government also fully finances the payment rate increase for Medicaid providers for two years and provides states with a series of grants from rate review to reinsurance. CBO estimates that states will have to spend some $20 billion (just 4% of the total cost) to implement the coverage provisions for Medicaid and CHIP between 2010 and 2019 and the Kaiser Commission on Medicaid and the Uninsured reached a similar conclusion.

It’s also worth pointing out that states will have a good deal of flexibility in how they implement reform. As the report notes, “a state may opt to have HHS establish its exchange,” can set-up separate exchanges for individuals and small businesses, or establish just one exchange for both. Individual states also may decide to allow large businesses in the exchange.”