Health Care Reform to Save States BillionsBy Bruce Lesley
December 2, 2010
Today, the President and Vice President are meeting for the first time with newly elected governors since the midterm election. While there are a vast number of issues each governor likely sees as a priority for their own state, there is no disputing that recession-strained state budgets will be a major topic of conversation. And with these budget conversations, there will inevitably be discussion of the effects of health care reform—seeing that dismantling the Affordable Care Act (ACA) was quite the popular campaign platform for some, if not all, of the new Republican governors. Although critics, including some of the newly elected governors, are right when they say the ACA will increase Medicaid costs for states, they are unfortunately only looking at one side of the equation. A refreshing new report balances out the misconceptions and fire-fueling political soapbox rhetoric regarding how states will fare under health reform.
Yesterday, First Focus released a report by the Urban Institute, entitled Net Effects of the Affordable Care Act, which details three distinct ways states can actually increase their budget savings by using the new provisions under ACA to their advantage. The Urban Institutes findings note that the ACA—which is already a win for children and families – is also a state budgetary win, allowing states to save between $40.6 and $131.1 billion during 2014-2019. This report is also consistent with earlier findings by the Council of Economic Advisers and the Lewin Group that show, on balance, states will realize significant net budgetary gains from the legislation. This new data notes that billions of dollars in state savings can be achieved by replacing state Medicaid dollars with federal money in three areas: optional Medicaid coverage for adults over 133 percent of the federal poverty line (which is required by ACA) can be shifted into the federally-funded subsidies in the exchange; uncompensated care can also be replaced with federal dollars, as well as state mental health services.
The dollar amounts benefiting states will certainly vary depending on how well the economy rebounds as well as the state fiscal policies involved, but these billions of dollars that can be added to state budgets are very real. However, these savings will only happen if our state legislators stop posturing for partisan gain and take an honest look at how their state will fare if health reform is implemented in a meaningful way. If we challenge our state lawmakers to make smart decisions for our futures – not theirs – we can make state families healthier and stronger, while still delivering real value for taxpayers.
For more information on state savings and ACA: