Medicaid Expansion a Real Budget-Buster

April 21, 2011
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Cato scholar Jagadeesh Gokhale has a new study on the effect the Affordable Care Act will have on the Medicaid budgets in populous states. He explains:

Unless it is repealed, the Patient Protection and Affordable Care Act of 2010 (PPACA) promises to increase state government obligations for Med­icaid by expanding Medicaid eligibility and in­troducing an individual health insurance man­date for all U.S. citizens and legal permanent residents.

Cato scholar Jagadeesh Gokhale has a new study on the effect the Affordable Care Act will have on the Medicaid budgets in populous states. He explains:

Unless it is repealed, the Patient Protection and Affordable Care Act of 2010 (PPACA) promises to increase state government obligations for Med­icaid by expanding Medicaid eligibility and in­troducing an individual health insurance man­date for all U.S. citizens and legal permanent residents.

But PPACA provides states with no additional federal financial support for new enrollees among those eligible for Medicaid under the old laws. That makes increased state Medicaid spending from higher enrollments by “old-eligibles” virtually certain as they enroll in Medicaid in response to the individual mandate to purchase health insurance.

Specifically,

  • California and Florida’s Medicaid expenditures fund­ed by general revenue will nearly double by 2020 (from $19.4 billion in 2008 to $35.2 billion in California; and from $6.3 bil­lion in 2008 to $12.6 billion in Florida).
  • Medicaid expenditures in New York State are projected to grow from $23.8 bil­lion to $32.9 billion during the same period.
  • In Texas, Medicaid costs paid by general revenues will rise even faster – from $8.5 billion to $18 billion by 2020.