Massachusetts expects net savings from Medicaid expansion

July 18, 2015

Many states that opted to expand Medicaid under the ACA have seen enrollments surge well beyond projections, raising concerns that the added costs will strain their budgets when federal aid is scaled back starting in two years, an Associated Press analysis shows, however, Massachusetts appears well situated going forward. Here's a look at what's happening in the state:

  • Massachusetts has the highest rate of insured residents in the country, with about 97% covered, and passage of the ACA has given the state a chance to enhance that coverage, state officials say;
  • Massachusetts received a federal matching rate of 50% before the federal law. The rate grew to 75% in 2014 and will continue to rise each year before reaching 93% in 2019 then settling at 90% in 2020, state officials say;
  • The state projected about 325,000 Medicaid expansion enrollees for 2014 with no significant change expected through 2020. The federal match enhancements associated with the federal law are expected to more than offset the additional costs to Massachusetts of Medicaid expansion; and
  • In the state fiscal year that ended June 30, estimated spending for the Medicaid expansion population came to about $1.7 billion before federal matching funds. The state budget for the new fiscal year is $38.1 billion, or a net state general fund of about $28 billion, excluding federal revenues. About 80% of the federal revenues received by the state are federal matching funds for Medicaid. State health officials say that when the federal matching funds and savings from consolidating other state health coverage into Medicaid is factored in, Massachusetts will realize a net state savings for its Medicaid expansion.