Medicaid expansion will save money | Arkansas Blog

Tuesday, July 10, 2012

Medicaid expansion will save money

Posted By on Tue, Jul 10, 2012 at 11:19 AM

The federal law to expand Medicaid is complicated and expensive. But, here's one moving part I'd overlooked previously. Though expanded programs will eventually cost the state money, they also will save money. Fully implemented in 2020, new Medicaid programs will require a 10 percent state match — an estimated $200 million in 2020.

But ....

That expansion will shift some people already on Medicaid to a 100 percent federal coverage for the next three years and no more than a 10 percent match in future years. The state is now paying about 25 percent of the cost of that coverage.

I put the following question to Amy Webb at DHS and got the following response:

It is my understanding that the Medicaid expansion would cover some who are now on ArKids First or other Medicaid programs that may only have a 3 to 1 match as opposed to 90-10. There could be actual $$ saved to offset the 10% phase in cost by moving current recipients to a lower state match %. Have you seen anything specific on that?

That is correct. The match rate for ARKids B, which last fiscal year had about 75,000 enrollees, goes up to 100 percent in fiscal year ‘15. In addition, we expect that many adults who only get Medicaid because their health care costs drive them into poverty (medically needy) would be covered under expansion as well. We are still working on an analysis of the full impact — positive or negative — that expansion would have on Medicaid. We hope to have that soon. Obviously, your reader has touched on one aspect of that in his question.

We have much more to learn. But this is at least one more indication that sweeping generalizations about insupportable cost increases might bear closer scrutiny.

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