The Price Tag On The Medicaid Expansion

Andrew Sullivan —  Jul 12 2012 @ 8:08pm

Cohn calls the expansion "the ultimate sweetheart deal":

For the first three years, the federal government is providing 100 percent of the money to cover these new populations. By 2020, the contribution will decline to 90 percent, so that states have to provide 10 percent of the funding on their own. But that’s still a far better deal than the states get on Medicaid right now. Nationally, state spending on Medicaid should rise by less than 3 percent because of the expansion, according to projections from the Congressional Budget Office.

Suderman differs:

[T]he law only provides 100 percent funding for the "newly eligible." Right now, however, there are an estimated 10-12 million individuals who qualify for Medicaid benefits but aren't enrolled. As a result of the expansion and the law's health andate, many of those individuals are expected to enroll. As I noted back in my 2010 magazine feature on state-driven resistance to ObamaCare, this is known as the "woodwork effect," and it could cost states a bundle—as much as $12 billion by 2020. 

CBPP counters:

Critics argue that state budgets will be hit hard by the costs of extending Medicaid to people who are already eligible for the program but unenrolled under current state rules, but will enroll as a result of health reform.  States will receive the standard federal Medicaid matching rate for covering these individuals (57 percent, on average), which is well below the 93 percent average federal match noted above for people whom the Affordable Care Act makes newly eligible for Medicaid.  Butthe CBO, Urban Institute, and Lewin Group estimates all account for the cost to states of covering the already-eligible individuals who will enroll.  CBO’s 93 percent average federal share of the Medicaid expansion’s costs and the estimate that state Medicaid costs will rise just 2.8 percent on average — and the even lower Urban Institute and Lewin estimates of state costs — reflect this cost. 

Cohn claims victory.