States could save $14 billion due to federal spending under healthcare reform act, study finds

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Due to an increase in federal spending under the healthcare reform law, state governments can expect a net savings in healthcare spending of $14 billion from 2014 to 2019, a new study from the Urban Institute finds.

The savings will come from Patient Protection and Affordable Care Act provisions that increase federal spending on uninsured individuals and additional healthcare functions that states previously paid for, study authors assert.

For example, state spending will increase by $80 billion to cover the law's expanded Medicaid population, according to the Urban Institute report, but that number will be offset by $66 billion in federal funds to cover existing Medicaid beneficiaries. The PPACA will eliminate Medicaid eligibility for certain adults with incomes that are over 138% of the federal poverty level, saving states $69 billion. By lowering the number of people without insurance by 12.5% to 25%, the federal government would save up to $87 billion, and states would collectively save $52 billion, according to the Urban Institute. Additionally, expanding Medicaid coverage to people with mental illnesses could save states between $11 billion and $22 billion, according to the study

The Robert Wood Johnson Foundation funded the Urban Institute study. Click here to read the report.