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The Fiscal Impact to States of the Affordable Care Act (ACA): Comprehensive Analysis

Medicaid expansion drives most substantial costs


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States play a critical role in the Affordable Care Act (ACA); their responsibilities are broad, encompassing four major categories: coverage expansion, infrastructure, benefit redesign and industry fees, and optional opportunities.

ACA’s fiscal impact on states is based on the influence of many different variables. To inform stakeholder discussion and potential decision making, Deloitte used its Health Reform Impact Model and ACA Provision Mapping Tool to evaluate the net financial impact to states of ACA (measured as the net cumulative cost on a per-person basis) and to construct plausible scenarios to identify cost/saving drivers. Among key findings:

  • ACA’s potential fiscal impact to states ranges from a savings of $318 to a cost of $470 per person (2011–2020).
  • The most substantial costs that states could face in implementing ACA provisions relate to Medicaid expansion: Enrollment is likely to increase from 39 million in 2011 to 51 million in 2020.
  • Other requirements — health insurance exchange (HIX) systems, insurance premium oversight, employee benefit changes, etc. — appear to have a nominal cost impact.
  • Managed care and medical management programs/services in Medicaid, as well as modification of state programs, have the potential to substantially lower costs.
  • Given states’ budget deficits, lagging economic recoveries, and political realities, deficits from Medicaid could force cuts in other programs, unless states implement innovative methods for managing Medicaid administratively and clinically.

To read the comprehensive analysis, please download the PDF attachment.

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