DO STATE HEALTH CARE COST ESTIMATES AFTER PPACA DEPEND ON POLITICS?

A couple of states have just released their estimates of the effect of PPACA on state health care expenditures over the next ten years or so. Democratic Maryland sees significant savings for the decade, while Republican Virginia forecasts huge cost increases over the next thirteen years. Is this political bias or just state-to-state differences?

The Baltimore Sun reports that Maryland’s Health Care Coordinating Council estimates that reform will save the state $829 million between now and 2019 and provide coverage to half of those who would otherwise be uninsured. The report also notes that the savings will peak by 2019 and then start to reverse to become expenditure increases.

In contrast, Virginia’s recently filed lawsuit challenging PPACA claims that the commonwealth would incur $1.1 billion in additional Medicaid costs over the 2015-2022 period.

So, is either estimate realistic? Why are they so far apart?

While there may well be some political bias—conscious or unconscious—in the estimates, and especially in the figures accompanying Virginia’s Republican Attorney-General’s lawsuit, there are also reasons why the numbers are very different in spite of the two states being close in population and geography. First, the Maryland forecast includes only “good years,” in terms of federal funding, while the Virginia estimate also includes three ”bad years,” in which additional costs most outweigh increased federal funding. Second, Maryland’s Medicaid program is currently more generous than Virginia’s and will not require the additional expenditures to meet PPACA’s expanded eligibility levels. Third, Maryland’s unique all-payer hospital reimbursement system means that costs will be reduced for Medicaid (and other payers) as the number of uninsured shrinks.

Perhaps more important than whether or not Maryland’s estimates are optimistic or Virginia’s are pessimistic, the comparison points out that health care reform is going to have a significantly greater impact on some states—those with the least generous Medicaid and state-only health care programs—than others.