ACA: Did Medicaid Expansion Increase State Spending?

HealthDay News — Federal funding insulated state budgets from increased spending related to Medicaid expansion, according to a study published in the April issue of Health Affairs.

Benjamin D. Sommers, MD, PhD, from Harvard University, and Jonathan Gruber, PhD, from the Massachusetts Institute of Technology, both in Boston, used data from the National Association of State Budget Officers (fiscal years 2010 to 2015) and a difference-in-differences framework to assess the effects of the Medicaid expansion’s first 2 fiscal years.

The researchers found that expansion led to an 11.7% increase in overall spending on Medicaid, which was accompanied by a 12.2% increase in spending from federal funds. State funds did not experience significant increases in spending as a result of the expansion. Nor did states significantly reduce spending on education or other programs as a result of Medicaid expansion.

“States’ advance budget projections were also reasonably accurate in the aggregate, with no significant differences between the projected levels of federal, state, and Medicaid spending and the actual expenses as measured at the end of the fiscal year,” the authors write.

Reference

Sommers BD, Gruber J. Federal funding insulated state budgets from increased spending related to Medicaid expansion [published online April 2017]. Health Affairs. doi: 10.1377/hlthaff.2016.1666