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Medicaid Expansion Could Save State More Than $6 Billion Over Next Nine Years

New report from New Jersey think tank fails to find downside to increasing Medicaid coverage.

New Jersey would save more than $6 billion in healthcare spending over the next nine years, if Gov. Chris Christie opts to expand Medicaid eligibility, according to a report released by a think tank Thursday.

New Jersey Policy Perspective calculated that the state would accrue the savings because the federal government would be picking up the tab for both new and current participants in two Medicaid programs. The first, General Assistance, covers childless adults with less than $2,520 a year in income. The state pays 50 percent of the medical costs for 40,000 participants in this program.

The second, FamilyCare, is meant for poor adults and their dependent children. To qualify, a family of four must earn no more than $30,725 a year. The state currently pays 35 percent of FamilyCare costs for the 134,000 participants in the program. The federal government takes care of the other 65 percent.

But the federal government will stop kicking in its share for both programs on December 31, if New Jersey decides not to expand Medicaid eligibility.

“I would say that’s a no-brainer, that there’s no reason not to do this,” said David Rousseau, a former state treasurer under Gov. Jon S. Corzine and a budget analyst for NJPP. Rousseau said the federal government would kick in between $100 million and $200 million that the state is on track to spend on FamilyCare in the upcoming budget year. Again, those numbers only work if Christie chooses to expand Medicaid.

If the governor opts for expanded eligibility, the feds will cover 100 percent of the costs of both General Assistance and FamilyCare from 2014 to 2016, with the state share gradually rising to 10 percent by 2020.

It’s not clear whether Christie will address that matter in the budget proposal he releases on Tuesday. The issue has divided Republican governors nationally, with 13 opposing it, including Pennsylvania Gov. Tom Corbett. Seven support it, the most recent being Florida Gov. Rick Scott. State advocates for cutting federal spending are pushing for him to reject the expansion.

If Christie decides against the expansion, he could reduce spending on these current programs in another way: by eliminating them. The state could also try to negotiate continued federal funding for the two programs, but it’s not clear whether the federal government will be willing to aid a state that’s refused expansion.

“If we don’t do Medicaid expansion, FamilyCare is at tremendous risk,” Rousseau said.

Raymond J. Castro, the author of the NJPP report and a senior policy analyst for the organization, noted the savings would more than offset any cost to the state of the expansion.

Castro said he’s concerned that Christie would consider cutting the programs, but added that he would be surprised if the governor did that.

“He could continue to serve the people they serve now, plus get the savings,” Castro said. “It would just be draconian” to cut the programs.

The report’s conclusions were disputed by Dr. Alieta Eck, who practices internal medicine in Piscataway and operates a clinic for low-income patients in Zarephath.

Continue reading on NJSpotlight.com.

NJ Spotlight is an issue-driven news website that provides critical insight to New Jersey’s communities and businesses. It is non-partisan, independent, policy-centered and community-minded.

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