WASHINGTON, D.C. -- The expansion of Medicaid under the new health reform law will significantly increase the number of people covered by the program and markedly reduce the uninsured in states across the country, with the federal government picking up the overwhelming majority of the cost, according to a state-by-state analysis released today by the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured (KCMU).

The analysis, performed by John Holahan and Irene Headen of the Urban Institute for the Foundation, is among the first to show for all 50 states and the District of Columbia the distribution of new Medicaid enrollees and costs, as well as the impact on the uninsured.  Health reform will offer Medicaid coverage to millions of low-income adults for the first time and help establish a national floor for Medicaid eligibility that contrasts sharply with the wide variation in eligibility across state Medicaid programs today.

States with large uninsured populations today are expected to see the biggest increases in the numbers of people who obtain health coverage through Medicaid.  California and Texas, for example, two states with considerable numbers of uninsured residents, are each projected to see 1.4 million fewer uninsured adults in 2019 due to the Medicaid expansion, with the federal government covering 95 percent of the cost in Texas and 94 percent in California.

"For a relatively small investment of state dollars, states could see huge returns in terms of additional coverage for their lowest income residents -- with federal dollars covering the bulk of the bill," said Diane Rowland, executive vice president of the Foundation and executive director of the KCMU.

Nationally, the analysis projects that Medicaid enrollment will climb by 15.9 million more people by 2019 than it otherwise would have, and the number of uninsured will fall by more than 11 million.  The cost of the Medicaid expansion between 2014 and 2019 would be jointly financed with the federal government paying $443.5 billion (or 95.4 % of the total cost) and the states contributing $21.2 billion.  

Methods

It is difficult to predict the impact of the new Medicaid outreach and enrollment efforts under health reform, as well has how states will respond.  So the analysis contemplates two scenarios and applies a uniform rate of enrollment (participation rate) among those eligible for Medicaid.  

The "Standard Scenario" approximates participation rates used by the Congressional Budget Office to achieve the 16 million-person increase in Medicaid enrollment by 2019.  The "Enhanced Scenario" examines the potential impact of more aggressive outreach efforts by federal and state governments, community based organizations and providers combined with the influence of the new individual mandate that everyone obtain health coverage.  It demonstrates the higher level of enrollment (and costs) that might be achieved if newly eligible people were to enroll at much higher rates than are seen among already eligible populations today. Of course, due to fiscal, political and administrative pressures, it is possible that some states may not achieve the expected enrollment gains contemplated under either scenario, leading to smaller increases in coverage and costs.

Both scenarios examine the coverage and cost impact of the Medicaid expansion for adults with annual incomes at or below 133% of the federal poverty level, which is $14,404 for an individual under current poverty guidelines.  The scenarios do not account for the impact of reform for children or state savings related to reductions in uncompensated care costs or reductions in Medicaid coverage for adults currently covered above 133% FPL.  Nor do they factor in other changes in Medicaid in health reform related to provider payment rates, changes to the drug rebates or new options related to payment reform.  

For more data on how individual states are expected to be affected, see Table 1 in the executive summary of the report.