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Expanding Medicaid in Pennsylvania would increase federal revenue to the state, study finds
Date:3/28/2013

ed to be $6 billion in 2014 if Medicaid is expanded and $4 billion without expansion. Because tax payments and other outflows to the federal government from Pennsylvania under the Affordable Care Act will be nearly $5 billion annually in either case, the state receives a net financial benefit only if Medicaid is expanded, according to the study.

Under the federal Affordable Care Act, states have the option to opt in or out of an expansion of the Medicaid insurance intended to provide health insurance to low-income families. The Affordable Care Act provides support to expand Medicaid to include families that earn up to 138 percent of the federal poverty level.

The federal government will pay a much larger share of costs for the Medicaid expansion than it does for current Medicaid enrollees. It will cover 100 percent of the costs for expanding Medicaid beginning in 2014 through 2016, and then gradually decrease support to 90 percent of costs beginning in 2020. The federal government currently pays about 54 percent of the costs for Medicaid in Pennsylvania.

Spending on Medicaid by Pennsylvania will grow whether the program is expanded or not. Without expansion, Medicaid costs are expected to rise $50 million in 2014, growing to $120 million by 2020, according to the study. These costs will primarily be caused by people who are currently eligible, but not enrolled. They are expected to sign up for the program in order to comply with the Affordable Care Act's mandate that individuals have health insurance.

Researchers say much of the higher state costs for Medicaid will be offset by new state tax revenue that will result from the increased spending on health care.

The study estimates that if the state expands Medicaid, there would be net surplus in state revenue from 2014 to 2016. But beginning in 2017, there will be a net cost to the state. The study estimates that state government will be required to pay $200 million more
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Contact: Warren Robak
robak@rand.org
310-451-6913
RAND Corporation
Source:Eurekalert

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