New NJPP Report Details Major Budget Savings for New Jersey if It Expands Medicaid

FEBRUARY 21, 2013

Contact: Jon Whiten, 609-393-1145 ext. 15 or

As Gov. Christie prepares to present his budget plan on Tuesday, a new report released today by New Jersey Policy Perspective shows New Jersey could reap billions of dollars in budget savings over the next decade by expanding Medicaid under the Affordable Care Act (ACA), and that not expanding Medicaid would result in billions of dollars of new costs to the state.

Gov. Christie has not yet said whether or not he will partake in this optional part of the ACA, though it is widely expected he will make his intentions known in his Tuesday budget message, if not before.

“We already know that accepting billions of dollars to expand Medicaid will improve New Jersey’s health and economy as well as create more jobs,” says NJPP senior policy analyst and report author Raymond Castro. “But this report also shows that it would result in major savings in the state budget, which could benefit taxpayers and more than offset any additional state costs that might occur from the Affordable Care Act. New Jersey cannot afford not to expand Medicaid.”

The report finds that expanding Medicaid over the next decade would:

• Result in $2.5 billion in state savings for childless adults already eligible in Medicaid and certain parents in NJ FamilyCare because of the much higher federal matching rate in the expansion.

• Avoid the loss of $4.2 billion in federal funds for these adults that would have to be replaced with additional state funds if the state did not expand.

• More than offset the $1.5 billion in state matching funds that will be phased in starting 2017 for the expansion.

• Create $434 million in state savings in charity care payments to hospitals for every five percent reduction in uncompensated care due to fewer uninsured patients.

• Create state mental health and substance abuse savings to treat the uninsured in the community.

• Reduce costs to treat most prisoners in hospitals outside correctional facilities.

• Generate savings for entitles outside the state like counties which could reduce property taxes.

• The earlier the state expands Medicaid, the more savings will be achieved.

“Every year administrations scramble to find resources to balance the budget and protect important programs, and maximizing federal funds is always at the top of everyone’s list. Receiving hundreds of millions of dollars for the budget from expanding Medicaid is a no-brainer,” says NJPP budget & tax analyst and former state treasurer David Rousseau. “Every dollar generated is one less dollar of cuts that need to be made, or one more dollar that could be used to increase important programs like school aid or higher-education funding. This decision even becomes more of a no-brainer when the added state cost of not expanding would put even more pressure on the budget.”

The report comes on the heels of previous NJPP reports that have detailed the widespread health and economic benefits that would result from New Jersey expanding Medicaid.

“The governor must make a decision – the sooner the better. It is a decision without an apparent downside: Expansion provides hundreds of thousands of struggling New Jerseyans with quality health care, injects billions of dollars into the state’s teetering economy, and saves billions of dollars in state expenditures,” says NJPP president Gordon MacInnes. “On the national stage, many of his conservative colleagues have made the easy decision to put the interests of their states above party ideology – he should follow suit.”

One Comment

  1. Patricia S. Stover February 25, 2013 Reply

    Would medicaid expansion cover hospital emergency room care for undocumented workers? I know one individual who had 2 stints inserted in his arteries and 3 in-patient ICU days after an emergent care visit to a hospital. The cost was over $100,000.00. He was working, but at $3 over minimum wage and had no insurance. The cost to the hospital was over $100,000.00, It seems practical for hospitals to be able to recup some of these costs under medicaid. Most hospitals do not turn away emergency patients, especially pregnant women about to deliver. I know some hospitals do pass some of these costs off to medicaid. It would be a good solution to make it legal.

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