Study: Reform Law To Expand Coverage, Hike State Spending

The federal health reform law will help about six million uninsured Californians obtain health insurance by 2016, but it also will increase overall state spending by 7%, according to a new RAND study, the Sacramento Business Journal reports.

The study, sponsored by the Council of State Governments, also examined how the law will affect Connecticut, Illinois, Montana and Texas.

Researchers predicted that the percentage of uninsured residents would decline significantly in all five states and that state spending would rise in all of the states except Connecticut.

Connecticut is an exception because some low-income individuals covered under a state-administered insurance plan will become newly eligible for Medicaid under the overhaul. The federal government is covering a substantial portion of the costs for newly eligible Medicaid enrollees.

California-Specific Findings

The RAND report also found that:

* The proportion of California residents with health insurance will increase from 80% today to 96% by 2016;
* The number of uninsured Californians will decrease from 7.5 million today to 1.6 million by 2016;
* Enrollment in Medi-Cal, California’s Medicaid program, will increase by 58% by 2016;
* About 17% of non elderly California residents will receive coverage through the state health insurance exchange by 2016; and
* The reform law will increase state spending by $2 billion annually by 2016 and by $4 billion annually by 2020.

Reasons for Changes in Coverage, Spending

Researchers said the reform law will increase access to health insurance because Californians will be able to obtain coverage through the state health insurance exchange and the forthcoming expansion of Medi-Cal.

They also noted that the Medi-Cal expansion would contribute to the predicted higher levels of state spending.

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