Gov. John Hickenlooper announced plans yesterday to save more than $280 million in Medicaid spending over 10 years, permitting the prudent expansion of coverage in Colorado. Projections show the savings, existing provider fee structure and other health-related revenues will more than cover the cost of the expansion.
“We worked diligently over the past several months to find savings in order to expand coverage,” Hickenlooper said. “Not one dollar from the state’s general fund will be used for this expansion, even in 2017 when the federal government begins to reduce its share.”
By 2026, Colorado will add 22,388 new jobs, increase economic activity by $4.4 billion and raise average annual household earnings by $608, if the state expands Medicaid eligibility... according to an independent report commissioned by the Colorado Health Foundation and released yesterday. The report, Medicaid Expansion: Examining the Impact on Colorado’s Economy, also finds that expanding Medicaid to 138 percent of the federal poverty level will require fewer state dollars than not doing so. You can download the 9-page report here.
“Expanding public health insurance to greater numbers of vulnerable Coloradans — in many cases, hard-working families — will bring more jobs, strengthen the state’s economy and generate higher household earnings, which benefit all Coloradans,” said Anne Warhover, president and CEO of the Colorado Health Foundation. “The economic boost from Medicaid expansion makes it fiscally responsible, and the return on investment will result in a more competitive Colorado by helping make our state the healthiest in the nation.”
Prepared over several months by Charles S. Brown, president of Charles Brown Consulting Inc., the expansion report provides a thorough analysis of what Medicaid expansion would mean for Colorado’s economy. With detailed projections through fiscal year 2025-2026, the report examines costs, savings and economic impacts associated with expanding or not expanding Medicaid. According to the report’s estimates, while the Colorado economy is projected to grow under both scenarios, Medicaid expansion will enhance that growth.
In FY 2025-26, the last year of the study period, a comparison of the “no expansion” and “full expansion” options shows that the following economic impacts will occur as a result of the decision to fully expand Medicaid:
- The economy, as measured by state gross domestic product (GDP), will be 0.74 percent larger than if Colorado does not expand its Medicaid program. Expansion will result in just less than $4.4 billion in additional state economic activity in 2025.
- Average annual household earnings will be $608 more with full Medicaid expansion compared to no expansion. o Colorado will have 22,388 more jobs in 2025 if the state fully expands Medicaid.
- While Medicaid expansion is not free, the combination of federal support for expansion populations and state savings in programs makes full expansion less costly to the General Fund than no expansion until FY 2020-21.
- By FY 2025-2026, state General Fund appropriations would be a cumulative $133.8 million less for full Medicaid expansion than if the state chose not to expand.
- The larger economy that would result from Medicaid expansion will generate more state tax revenue without an increase in tax rates. In FY 2025-26, tax revenue is projected to be $128 million higher due to a decision to expand Medicaid. In each year, the combination of the additional revenue generated from the larger economy and savings in other General Fund programs is sufficient to fund the state’s share of the cost of Medicaid expansion.
Compared to no expansion, Medicaid expansion will add an additional 275,000 Coloradans to Medicaid enrollment by FY 2025-26. Those added to Medicaid insurance include 209,000 newly eligible adults without dependent children, 44,000 newly eligible parents and an additional 22,000 currently eligible but not enrolled children and parents.
Medicaid expansion will reduce the number of uninsured non-elderly Coloradans by 189,000 by FY 2025-26 and reduce the percentage of uninsured in the non-elderly population from 11.1 percent to 7.7 percent compared with non-expansion.
Under current law, the federal government will pay all expansion costs in Colorado from 2014 to 2016, with its share gradually going down over several years to 90 percent in 2020 and future years. As the report makes clear, the economic benefits of expansion will help cover the state’s share of the costs. “After looking closely at how Colorado would be impacted by expansion and no expansion, we found that expansion, while involving costs, will have a significant positive impact on the Colorado economy,” said lead researcher Charles S. Brown.
About the Colorado Health Foundation
The Colorado Health Foundation works to make Colorado the healthiest state in the nation by encouraging healthy living, increasing the number of Coloradans with health insurance and ensuring they have access to quality, coordinated care. The Foundation invests in the community through grants and initiatives to health-related nonprofits that focus on these goals, as well as operating medical education programs to increase the health care workforce.