The Economic Impact of Medicaid Expansion on Pennsylvania

The Affordable Care Act is a substantial reform of the U.S. health care insurance system. Using the RAND COMPARE model, researchers assessed the act's potential economic effects on Pennsylvania, factoring in an optional expansion of Medicaid, and found the state would enjoy significant net benefits. With or without the expansion of Medicaid, the act will increase insurance coverage to hundreds of thousands of Pennsylvanians, but the COMPARE model estimates that the expansion of Medicaid eligibility would cover an additional 350,000 people and bring more than $2 billion in federal spending into the state annually than if the state did not expand. Should the state expand Medicaid, the additional spending will add more than $3 billion a year to the state's GDP and support 35,000 jobs. But Medicaid expansion is not without cost for the state; the estimated cumulative effect on Pennsylvania's Medicaid spending will be $180 million higher with the expansion than without between 2014 and 2020. Substantial reductions in uncompensated care costs for hospitals are possible even without expansion, but savings to hospitals for uncompensated care funding are even larger with the Medicaid expansion, amounting to $550 million or more each year.