The Effects of the Medicaid Expansion on State Budgets: An Early Look in Select States

Appendix D: Estimates from Separate Report Commissioned by Kentucky

In February 2015, Kentucky released a report it had commissioned Deloitte to conduct and analysis of the impact of the first-year impact of the Medicaid expansion on Kentucky and to estimate the potential future impact. Using data from a number of sources, including the  data from the Centers for Medicare  & Medicaid Services (CMS), the Kentucky Cabinet for Health and Family Services (the state Medicaid agency), Aon Consulting (the state’s Medicaid actuary), and the Urban Studies Institute at the University of Louisville, the study provided point-in-time analysis of the impact across multiple areas – including the impact on Medicaid enrollment, the state’s uninsured rate, the state’s economy, it’s budget, the overall health care system and providers, and access to care for state residents. In terms of the effect on the state’s budget and economy, the study estimated that the Medicaid expansion will have a significant positive cumulative impact of $30.1 billion on Kentucky’s economy through SFY 2021; the net difference between expanding and not expanding Medicaid is estimated to be a positive $919.1 million from SFY 2014 through SFY 2021. The data below reflect the estimates for SFY 2014 and SFY 2015 and puts the fiscal effect in context of total state general fund spending.

Kentucky State Budget Effects of Medicaid Expansion, SFYs 2014 and 2015
Budget Areas SFY 2014 SFY 2015
Increased Enrollment among those previously eligible but not enrolled* $15.7 million $41.4 million
Additional benefits provided to those not in the expansion group** $4.2 million $9.6 million
State Administrative Costs*
Savings within Medicaid from pre-ACA eligibility transitions:
Medically Needy Spend-Down Adults -$2.4 million -$14.0 million
Breast and Cervical Cancer Program -$0.4 million -$1.3 million
Kentucky Transitional Medical Assistance Program (K-TAP) -$1.9 million -$9.0 million
Nursing Facility (Adult Medicaid)*** -$1.7 million -$7.9 million
Savings outside of Medicaid:
Department of Behavioral Health, Developmental and Intellectual Disabilities -$9.0 million -$21.0 million
Department of Corrections -$5.4 million -$11.0 million
Department of Public Health -$4.0 million -$6.0 million
Uncompensated Care Contributions (QCCT Contributions) -$13.8 million
Private Insurance for Foster Care Children**** -$1.0 million -$1.1 million
Increased Revenues:
State Income Taxes $19.3 million $56.3 million
State Sales Taxes $18.1 million $52.9 million
Fiscal Benefit (Net Savings and New Revenues): $43.3 million $143.3 million
Total State General Fund Spending in SFY 2013 $9.4 billion $9.4 billion
Fiscal Benefit from Medicaid Expansion as a Share of Total State General Fund Spending in SFY 2013 0.5% 1.5%
NOTES: *The cost and savings figures included here reflect the total impact of the ACA and are not isolated to the Medicaid expansion. **Kentucky elected to expand access to these substance use services to all of their Medicaid population, not just the newly eligible. The study commissioned by Kentucky noted that there would be increased general fund requirements for providing these additional substance abuse benefits to those previously eligible as well as those already enrolled in Medicaid. ***The study also noted savings from the transition of adults with disabilities from their Nursing Facility Medicaid group; according to the study, these are disabled adults that meet an administrative disability with assets below $2000. ****Kentucky previously provided health care coverage with state-only dollars to former foster care children up through age 25; this is a group now covered under Medicaid. In addition to the effects listed in the above table, the study also notes increased tax revenue for local occupational and payroll taxes.
SOURCE: Report on Medicaid Expansion in 2014. (Deloitte commissioned by Kentucky, February 2015.) The calculations of savings compared to SFY General Fund Spending are those of the authors based on savings figures provided by state officials compared to the state general fund spending across all budget categories for SFY 2013 as reported by the National Association of State Budget Officers in their State Expenditure Report: Examining Fiscal 2012-2014.
Appendix C: Washington State Budget Impacts of the Medicaid Expansion

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