The evidence confirming that closing the coverage gap is good for working families and state budgets continues to pile up. In addition to the recent good news from Kentucky, two recent reports detailing the outcomes from closing the gap in four other states are showing savings when states accept federal dollars to close the Medicaid coverage gap.  We hope these findings inspire state lawmakers – whose top priority is balancing the budget – to champion closing the coverage gap on behalf of both their constituents and their budgets.

The two  studies – the first on Kentucky and Arkansas and the second on Connecticut, Washington and New Mexico – illustrate several positive budget impacts from closing the gap:

  • State savings from enhanced federal matching. Previously, states had to pay 30 to 50 percent of the cost of covering high-need Medicaid beneficiaries. With expansion, some of these beneficiaries are now covered by 100 percent federal funding. Arkansas saved $17.5 million in 2014 by accessing these federal dollars, while Kentucky is poised to save more than $38 million in 2014 and 2015.
  • Savings in state-based health programs. By shifting the cost from state dollars to federal dollars, all five states experienced savings in behavioral and public health programs, while four states quantified savings for in-patient care for incarcerated individuals.
  • State and local savings in uncompensated care costs. State and local governments generally fund 40 percent of uncompensated care costs (UCC). Closing the gap allowed some states and localities to significantly reduce these costs – $17.2 million in Arkansas and $13.8 million in Kentucky for 2015. Additionally, a recent news report about New Jersey cites a $150 million reduction in UCC spending for 2015.
  • Long-term state savings and revenues attributable to closing the gap. While all states cited positive short term effects to the state budget from closing the gap, Washington and Kentucky are reporting a longer-term budgetary impact. Washington will produce a $79 million net savings in 2014 as well as net Medicaid savings each fiscal year from 2013-2021 (even when federal matching drops to 90 percent). Likewise, closing the gap generates a $919.1 million positive economic impact in Kentucky from now until 2021.

Although each state and budget is unique, these studies provide compelling and consistent evidence that closing the gap saves states money. We hope the 22 states who have not yet closed their coverage gaps will take note: they can boost state budgets and provide health security to working families.