New Study Confirms That Obamacare Is Saving States Money

Protesters rally for Medicaid expansion outside the Ohio Statehouse CREDIT: AP PHOTO/JAY LAPRETE
Protesters rally for Medicaid expansion outside the Ohio Statehouse CREDIT: AP PHOTO/JAY LAPRETE

Many of the states that agreed to expand the eligibility requirements for their Medicaid programs under the health law are reaping millions of dollars in savings, according to two new reports that confirm the financial benefits in store for state lawmakers who implement this particular Obamacare provision.

The first study, from the Robert Wood Johnson Foundation, examined Kentucky and Arkansas — two states with previously high uninsurance rates that have benefited significantly from Medicaid expansion.

According to the researchers, those states should serve as prime examples of how “expansion can produce savings in tax dollars and generate new revenue for state budgets.” Between state fiscal years 2014 and 2021, Kentucky will save an estimated $820 million and Arkansas will save an estimated $370 million after accepting federal funding to extend health coverage to additional low-income residents.

Those savings come from a combination of the additional federal funding allocated for states that accept the expansion and the decline in uninsured residents seeking uncompensated care, which increases revenue for health providers.


The second study, from the Kaiser Family Foundation, reported similar findings for Connecticut, New Mexico, and Washington State. Although the researchers acknowledge that it’s difficult to isolate the specific effect of Medicaid expansion on state budgets, they conclude that “early evidence from interviews with budget officials in these case study states shows state savings and revenue gains with limited costs resulting from expansion.”

The three states examined in the Kaiser study are also saving money in programs outside of Medicaid itself, particularly when it comes to their behavioral health programs. With additional federal funding to finance Medicaid, states are able to shift money around to allocate more resources to mental health services, which have suffered big cuts in state budgets over the last several years.

Previous studies projected big savings for Medicaid expansion states — but, now that the policy has been in effect for a full year in many states, researchers are able to start confirming that positive benefit more explicitly. Other states, like New Jersey, have also started factoring the savings stemming from Medicaid expansion into their budgets.

There’s been some other recent evidence that Medicaid expansion can also help spur job growth. According to a recent report from the market research group FitchRatings, the states that expanded their public health programs are creating jobs in the health care field at a more rapid rate, suggesting that “ACA expansion is generally positive for that sector’s employment profile.”

Health experts agree that Medicaid expansion has been one of the most successful provisions of the health reform law. States that expanded their programs saw much bigger drops in their uninsurance rates as they extended coverage to low-income people who were previously locked out of affordable insurance. If the entire country had accepted the expansion, the national uninsurance rate would be two percentage points lower, according to an analysis from the New York Times.