We know we’re starting to sound like a broken record, but we couldn’t help but share that yet another report boasts how closing the gap is good for state budgets. It’s no surprise—similar to the outcomes we highlighted in previous posts, this most recent study from the Robert Wood Johnson Foundation and Manatt Health Solutions finds that closing the gap will deliver more than $1.8 billion in savings and new revenues for eight states by the end of 2015.

These savings and revenues come from three key sources:

  • Savings from enhanced federal matching. States that have closed the gap receive 100 percent federal funding for providing full Medicaid coverage to beneficiaries who previously had limited Medicaid benefits. These folks include “medically needy” individuals, pregnant women and individuals with disabilities. Seven out of the eight states in this study projected savings in this category.
  • Reduced state spending on programs for the uninsured. Now that certain groups of people are no longer in the coverage gap and are able to secure full Medicaid benefits, every expansion state will spend much less on state-funded health care for prisoners, mental and behavioral health programs, public health programs and uncompensated care funding to hospitals.
  • Increased revenue from insurer taxes. Four states in the report were able to capture increased revenue because more people are covered – although all states with these taxes will get in on this action. For example, Arkansas brought in $4.7 million in 2014 and will bring in almost $30 million in 2015 as a result of having closed the coverage gap.

The results are clear – drawing down federal funds to cover more people is good for state budgets. It’s also exciting that both Arkansas and Kentucky were able to calculate that their savings and revenue will more than pay for expansion through 2021. We only hope that policymakers in states with a remaining coverage gap hear this good news loud and clear!