BEYOND THE NUMBERS
For states that want to increase coverage for the uninsured, ACA is a bargain. The federal government will pay 100 percent of the cost of covering the newly eligible enrollees beginning in 2014, phasing down to 90 percent in 2019. Since ACA’s enactment, there has been significant research on the estimated annual cost to states of its implementation. The Kaiser Commission on Medicaid and the Uninsured has projected average additional state spending over the pre-ACA baseline of 1.4 percent by 2019, while a study by the Lewin Group estimate increased state spending of 1.1 percent. (Report of the State Budget Crisis Task Force, p. 20)It also recommends that federal and state governments work together to control rising health care costs as well as Medicaid costs. We very much agree. Rising health care costs affect both public programs like Medicaid and Medicare as well as private insurance, since both publicly and privately funded health care are delivered largely by the same providers in the same settings and use the same procedures and medications. Moreover, Medicaid spending per beneficiary has grown more slowly than private insurance premiums over the last decade. Medicaid coverage also costs considerably less per beneficiary than private coverage because of Medicaid’s lower payment rates to providers and lower administrative costs. Unfortunately, the Ravitch-Volcker report doesn’t make clear that state Medicaid spending — while growing — is still a distant second behind state spending on K-12 education. The graph below, which we’ve reproduced from the report, seems to show the opposite, but its measure of “total state spending” includes spending financed by both federal Medicaid funds and state revenues.