South By North Strategies, Ltd.

Under the federal Patient Protection and Affordable Care Act, all individuals with incomes below 133 percent of the federal poverty level will be eligible for Medicaid. Because states and the federal government share the costs of the Medicaid program, program expansion will impose some costs on state budgets.

A recent study by the Kaiser Commission on Medicaid and the Uninsured estimated the state-by-state costs associated with the required expansion of Medicaid. The study reached three broad conclusions:

• The expansions will “significantly increase coverage and reduce the number of uninsured.”
• The federal government will cover “a very high share of new Medicaid costs in all states.”
• Additional state spending will be small “compared to increases in coverage and federal revenues.”

While the exact costs borne by states will depend on choices made during the implementation phases, North Carolina stands to do well. Depending on the assumptions used, the expansion will reduce the number of uninsured, low-income Tar Heels by between 47 and 72  percent. Meanwhile, state spending likely is to rise by between 3 and 5 percent. Overall, the federal government will cover between 93 to 95 percent of North Carolina’s expansion costs.