The costs of the newly eligible are of concern because the federal government is bearing 100 percent of the costs of insuring that population through 2016. After that, the federal government's share of the costs will drift down, but to no less than 90 percent of the costs—individual states will pay the difference for the newly eligible.
Total Medicaid spending by all states, which includes their share of the newly eligibles' benefits, will be an estimated $317.7 billion in 2022. That's more than 7 percent lower than the $342.5 billion that the actuary previously projected states would spend on the program that year.
Medicaid expansion is a key component of the Affordable Care Act's goal of increasing the number of Americans with health coverage. As originally designed under the ACA, nearly all adult Americans who have a household income of below 138 percent of the federal poverty level, or $27,734 for a family of three, would be eligible for the program.
Previously, states often had much tighter income restrictions on adults participating in the programs, with many states barring adults without dependent children altogether from Medicaid, which is jointly run with the federal government.
A 2012 Supreme Court decision ruled that the federal government could not compel states to expand Medicaid. So far, 29 states and the District of Columbia have adopted Medicaid expansion, two states are actively contemplating expansion and 19 states have so far rejected expansion.
The Obama administration has been urging the remaining states to expand Medicaid, saying it would not only bring economic security to many uncovered poor people, but also would be a financial windfall to individual states in the form of increased federal spending that would benefit hospitals, doctors and other medical projects. The administration says Medicaid expansion will create $62 billion in total economic activity in states that have expanded by 2017, boosting employment by an estimated 172,000 jobs in expansion states as of 2015.
"As it has for the past 50 years, the Medicaid program remains a foundation of our health-care system by providing health coverage to individuals who would not otherwise have access to affordable health-care services," said CMS spokesman Aaron Albright, when asked about the actuary's report.
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But a leading Medicaid expansion critic said the report was more evidence against the wisdom of the program.
"The revision up should not have been a surprise to those familiar with history," said Joshua Archambault, senior fellow at the Foundation for Government Accountability. He added that the foundation "has been writing for years now about previous Medicaid expansions and the significant deleterious impact on taxpayer-funded budgets. Sadly, our projections have become a reality."
"The impact of the cost overruns of Obamacare's Medicaid expansion at the state level is often easier to comprehend than numbers with lots of zeros in a long federal report," Archambault said.
For example, he said, Medicaid expansion in Ohio has run $1.5 billion over budget so far, Washington state has had to boost its biennial budget by $2.3 billion "solely due to higher-than-expected" expansion costs, and Illinois' expansion ran $800 million over budget last year.
"The destructive fact of cost overruns due to Obamacare's Medicaid expansion will be less money for education, public safety and roads. In addition, when state lawmakers balance their budget, they will put the most vulnerable already on Medicaid on the chopping block first, and protect the able-bodied childless adults that are part of the Obamacare expansion—this is a result of the perverse funding structure in the ACA."