Medicaid financial burdens continue regardless of reform

Even if the economy rebounds, Medicaid will continue to strain state budgets regardless of whether they expand their programs under the Patient Protection and Affordable Care Act, according to a report from the State Budget Crisis Task Force released yesterday.

The report examined California, Illinois, New Jersey, New York, Texas and Virginia and found a common thread of ongoing financial burdens from Medicaid. Thanks to the Supreme Court ruling, states will see a moderate increase in Medicaid costs, widening the gap between spending and revenue, according to the report.

The Centers for Medicare & Medicaid Services projects total Medicaid costs to grow at an average annual rate of 8.1 percent between 2012 and 2020 with implementation of health reform provisions and at a rate of 6.6 percent without them, noted the task force, led in part by a former Federal Reserve chairman.

States that choose to forgo Medicaid expansion still will to be confined by the ACA's maintenance of effort provisions until 2014 for adults and 2019 for children, furthering driving up costs, according to the report.

And even if the federal government approves Medicaid cost-cutting efforts, the feds will collect half the savings, meaning states must realize $2 in federally approved cost savings to save $1 to their budgets, the report states.

In contrast, a report last week from the Center on Budget and Policy Priorities concluded reform will reduce state and local government costs for uncompensated care. "Expanding Medicaid is thus a very favorable financial deal for states," it said.

To learn more:
- here's the task force report (.pdf) and summary (.pdf)