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What’s the Cost of Health Reform in RI?

May 26, 2010

When health care reform was still being debated in congress, governors across the country (including Governor Donald Carcieri) expressed serious concerns about how the overhaul might affect state budgets.

Carcieri penned a letter to our congressional delegation, explaining his specific concerns.  His number one worry? A plan to expand government sponsored health care (Medicaid) to to adults at 133% of the federal poverty level or below.

The federal government will  pay for 100% of this expansion until 2016, but over time states will start picking up a portion of the cost.  By 2020, they’ll be paying for 10% of the expanded program.

What does this mean for states? Today, the Kaiser Family Foundation tried to answer that question in a state by state analysis of the cost of expanding medicaid.

The most interesting numbers for Rhode Island are the estimates about what would happen WITH reform and what would happen WITHOUT reform.

The analysis shows that RI’s medicaid expansion would increase the number of people on medicaid by 20% but only cost .7% more than what the state could expect to pay for the medicaid program by 2019.

By 2019, If health care reform hadn’t happened…

-there would be 20% less people on medicaid

-Rhode Island would be spending .7% less on medicaid

The authors conclude that the extra costs associated with expanding medicaid are tiny compared to what health care costs would look like anyway, with the added benefit of having more people with health insurance.

Here are more raw numbers from their analysis for Rhode Island (assuming no aggressive outreach)-

Total new people on medicaid by 2019- 41,185

Number of those new people who didn’t have insurance before29,147

Percentage reduction in uninsured adults at or below 133% of the poverty line50.6%

Total state spending for expansion between 2014-2019- $70 million

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