REPORT: States Could Save Up To $129 Billion From Health Reform

A new report from researchers at the Robert Wood Johnson Foundation and the Urban Institute predicts that states will save between $92 billion and $129 billion from 2014 to 2019 “because of provisions in the Affordable Care Act (ACA) that are designed to reduce the uninsured population and provide federal funding for functions that, in the past, have been financed by states and localities.” The federal government will spend “$704 billion to $743 billion more under ACA, while states will spend $92 billion to $129 billion less with ACA than without it.” A partial breakdown:

— Medicaid costs: State spending is actually expected to rise by $80 billion on new enrollees, but the federal government will largely offset these costs with an anticipated $66 billion in new federal spending on existing Medicaid enrollees. States will also save $69 billion from the elimination of Medicaid eligibility for individuals above 138 percent of the federal poverty line.

— Savings from uncompensated care: Since more individuals will have more access to insurance, state spending on uncompensated care could fall by 12.5–25 percent, saving the federal government up to $87 billion, while states would collectively save $52 billion.

— Savings in mental health: Reform will extend Medicaid to many low-income people with mental illness who previously were uninsured, thus saving states between $11 billion and $22 billion dollars from 2014-2019.


This study is in line with past analysis from the Kaiser Family Foundation, which similarly found that the federal government will contribute 95 percent of all the additional Medicaid spending, helping states reduce uncompensated care, cover more people, and even boost struggling economies. Under the law, states don’t have to spend additional Medicaid dollars on the expanded population until 2016 and will received a federal match of 90 percent for the newly eligible Medicaid enrollees by 2020.