Medicaid Expansion Produces $353M Savings

New Jersey Expects Continued Net Savings Through Medicaid Expansion

In the fourth installment of their Medicaid Works campaign, the Center for Budget and Policy Priorities (CBPP) focused on how expanding Medicaid produces state savings and connects vulnerable groups to care.

A recent CBPP paper shows that health reform’s Medicaid expansion has produced net budget savings for many states. States such as Arkansas, Kentucky, Louisiana, and New Jersey expect continued net savings in coming years, even after they begin paying a modest part of the expansion’s cost.

People in expansion states where most low-income individuals and families now have access to coverage, no longer have to rely on the patchwork of Medicaid programs serving people with specific health conditions (such as certain women with breast and cervical cancers). These communities now have access to primary and preventive care that can keep them healthy, and they can count on getting care if they do become sick.

Before health reform, only one-fifth of low-income workers had coverage through their employers, and coverage in the individual insurance market was prohibitively expensive for most people, assuming they could obtain coverage at all. Medicaid coverage was not an option for many poor adults.

Medicaid provides cost-effective coverage, helps insure the uninsured, and supports state and local economies.

The report finds that In New Jersey, the expansion will produce net savings of $353 million this fiscal year and $355 million next year.

These savings reflect lower payments to hospitals for uncompensated care, higher revenue from the state’s tax on health plans serving Medicaid beneficiaries, and lower Medicaid costs for groups covered under a pre-health reform waiver that were shifted into the new expansion group.

CBPP is a nonpartisan research and policy institute. It pursues federal and state policies designed both to reduce poverty and inequality and to restore fiscal responsibility in equitable and effective ways. It applies its deep expertise in budget and tax issues and in programs and policies that help low-income people, in order to help inform debates and achieve better policy outcomes.

States like New Jersey are using Medicaid expansion to better target care to specific populations including people experiencing homelessness. Medicaid expansion has the flexibility to fund personal care services to recipients living in supportive housing.

CBPP Report

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