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State Budgets Under Federal Health Reform: The Extent and Causes of Variations in Estimated Impacts

This analysis examines the potential costs and savings that the health reform law may generate for state budgets, a topic of great interest at a time when states continue to struggle with tight budgets in the wake of the recession. The analysis seeks to explain why recent state estimates of the likely impact of health reform on their budgets vary widely, and discusses the major expected sources of costs and savings as the new law is implemented.

It finds that there are many opportunities and new options to offset the state costs related to the expansion of Medicaid, such as reducing payments for uncompensated care costs as the number of uninsured declines. The actual impact on states will vary based on current state coverage and according to how each state implements the law. The review of state analyses found most state estimates reflected potential cost increases but did not account for the full range of potential savings.

Executive Summary (.pdf)

Issue Brief (.pdf)