Study: Obamacare could increase costs in RI, unlike elsewhereJuly 6th, 2012 at 5:00 am by Ted Nesi under Nesi's Notes, On the Main Site
The key question: how much will the new law reduce uncompensated care at Rhode Island hospitals?
With a 50% decline in the cost of uncompensated care, the Affordable Care Act would reduce state-level spending on health care by $64 billion between 2014 and 2019; with a smaller decline of 25%, state-level spending would actually rise by $44 billion, according to an Urban Institute study [pdf].
Rhode Island “would see increased costs under the low scenario and reduced costs under the high scenarios, with the magnitude of savings under the high scenario being greater than … the additional costs under the low scenario,” the study’s authors explained.
Federal spending on health care in Rhode Island over the five-year period will increase by an estimated $1.96 billion to $2.12 billion depending on the scenario, including nearly $962 million for subsidies to residents who buy coverage through the new health insurance exchange, according to the study.
Most other states would save money under either scenario, unlike Rhode Island, and supporters are pointing to those savings to counter some governors’ resistance to the law’s expansion of Medicaid coverage.
“Much of the state savings we project depend on the Medicaid expansion,” Stan Dorn, a senior fellow at the Urban Institute, told The Washington Post. “It’s essential to reducing uncompensated care; it’s a key piece shifting mental health costs from the state to the federal government; and it’s essential for other state savings as well.”
The authors of the Urban Institute study cautioned that their analysis could not estimate all of the state-specific savings that the Affordable Care Act could provide, including savings from better coordination of care, reforms to the delivery system, higher tax revenue from insurance premiums and lower premiums for state workers.
State spending on health care is projected to rise in 2020 compared with in 2014-2019 because the federal government will reduce its cost-sharing for the Medicaid expansion from 100% to 90%. “States would still spend less under the ACA than without it,” the authors wrote. “The pattern for subsequent years will be similar to 2020, but with some differences driven by economic and demographic changes over time.”
(chart: lieutenant governor’s office)