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Study: Medicaid expansion not as expensive for New Jersey as other states

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As health care reform implementation continues full steam ahead, a study produced by Kaiser Family Foundation shows New Jersey would not see a moderate increase in state spending if Medicaid coverage is expanded.

According to the study, if New Jersey implements the Medicaid coverage expansion, the state will spend an estimated $1.5 billion more than it would without the expansion between 2013 and 2022.

The Kaiser Family Foundation study shows that the seven states that have already expanded Medicaid coverage to levels established in the Affordable Care Act will actually see a savings in state spending, as more federal dollars will enter those states to cover the newly eligible people. For states like New Jersey that already have parts of the expansion implemented the cost increase of new Medicaid recipients will be smaller than states that have not increased coverage at all.

In 2008, the state enacted a law ensuring all children are covered by health insurance, creating the New Jersey FamilyCare program. Children make up the largest population of currently eligible Medicaid population that is not participating.

The Kaiser Family Foundation estimates that New Jersey's Medicaid population would increase to 441,000 by 2022 if the expansion is implemented, and the state would reduce its uninsured population by almost 42 percent.

John Holahan, director of the Health Policy Research Center at the Urban Institute and the primary author of the study, said the report shows "the economics are strongly in favor of the expansion." Holahan said the immediate declaration by politicians that states would not participate after the Supreme Court's ruling were mostly political, and that pressure from stakeholders would likely encourage most states to participate.

As a region, the Mid-Atlantic stands to see savings in state spending by implementing the Medicaid expansion. If all of the states in the region implemented the expansion, the region could expect to spend about 4.2 percent less on Medicaid than it would without the expansion from 2013 to 2022.

Nationally, if all states expanded coverage, $1.03 trillion would be spent over the same amount of time for new health insurance coverage. Of that amount, $952 billion would be spent by the federal government, and $76 billion by state governments. In total, it is estimated that $7.37 trillion will be spent on Medicaid in the next decade.

The Kaiser Family Foundation study was an updated analysis of a study completed in 2010 before the Supreme Court ruled that the expansion was optional for states. Since then, eight states have said they will not participate, but most formal decisions will come during the budgeting process in early 2013.

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