The Role of Medicaid in State Economies and the ACA

The Affordable Care Act (ACA) calls for a Medicaid expansion to cover nearly all adults with incomes at or below 138% of the Federal Poverty Level (FPL)($15,856 for an individual, $32,499 for a family of four). The federal government pays 100% of the cost of coverage from 2014-2016, eventually scaling down to 90% in 2020 and beyond (compared to current matching rates of 50% – 73.4%). However, the Supreme Court decision in June 2012 effectively makes the Medicaid expansion a state option.

Many analyses were conducted to assess the coverage and fiscal implications of the Medicaid expansion for individual states.  Most of these studies have examined new state costs tied to the Medicaid expansion as well as savings opportunities due to reductions in spending for uncompensated care or funding for other indigent care programs, while a number also included estimates of the broader economic effects of the Medicaid expansion such as the impact on gross state product (GSP), state and local revenues, or jobs. This brief summarizes findings from 32 studies in 26 states analyzing the anticipated impact of the ACA Medicaid expansion (and in some cases full ACA implementation) on state and local economies.