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Staggering Medicaid Cost Increases in Illinois, New York, Florida, and Texas

by Benjamin Domenech on January 19, 2011

The next few years will bring significant Medicaid cost increases across the country as newly eligible individuals – and those already eligible but unregistered in the absence of the national individual mandate – are added to an already overburdened system. Michael Cannon of the Cato Institute outlines the staggering Medicaid cost increases to some of the largest states:

ObamaCare requires each state to open its Medicaid program to all legal residents earning up to 138 percent of the federal poverty level.  Supporters estimate this mandate will cost state governments little: the Kaiser Family Foundation’s worst-case-scenario estimates suggest that state Medicaid spending would rise by just 1.2 percent in New York and 5.1 percent in Texas between 2014 and 2019.

In a new working paper titled, “Estimating ObamaCare’s Effect on State Medicaid Expenditure Growth,” Cato Institute Senior Fellow Jagadeesh Gokhale shows that those estimates are generally far too low.  Gokhale finds that all of the five most-populous states — California, Florida, Illinois, New York, and Texas, which account for roughly 40 percent of U.S. population — will struggle to cope with rising Medicaid spending even without ObamaCare’s Medicaid mandate. But ObamaCare significantly increases that burden on four of them:

In its first year of full implementation (2014), ObamaCare will increase spending on Medicaid by 9.0 percent in Florida, 22.2 percent in Illinois, 6.4 percent in New York, and 13.5 percent in Texas. Spending in California is projected to be smaller by about 3 percent.

The cost grows over time.  The following chart shows the burden that ObamaCare’s Medicaid mandate will impose on these states over the first 10 years of full implementation:

Read the rest of Cannon’s post here.

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