The Kaiser Family Foundation released a brief examining state budgets under the national health care reform law.  The authors suggest that states have opportunities to offset their health reform implementation costs by reducing payments for uncompensated care as the number of uninsured individuals decreases.  In addition, the brief notes that most states’ projections do not accurately depict potential savings under the law.  The authors conclude that the law’s impact on state budgets will be a function of how states implement the law, suggesting that opportunities exist for states to reduce their costs through effective implementation.

From the report:

Under the Patient Protection and Affordable Care Act (ACA), states will play a large role in the implementation of the major provisions of federal health reform such as expanding Medicaid coverage, establishing state insurance Exchanges, regulating private insurance, and developing coordinated eligibility and enrollment systems and processes. States are concerned about the new costs that accompany their enhanced responsibilities, particularly as their revenues are only now beginning to recover from very troubled fiscal times. Reported fiscal impacts of the ACA on aggregate and individual state budgets have varied widely. Some estimates show high costs and others suggest that states will realize substantial net savings. This variation has contributed to the political controversy over states’ role in the ACA, and high costs have also been cited in litigation. While all estimates show some new costs for states associated with the large expansion of Medicaid, the ACA also creates new savings and revenues for all states, along with opportunities for states to achieve further, often longer-term state savings.  

Full Report: State Budgets under Federal Health Reform: The Extent and Causes of Variations in Estimated Impacts (PDF | 4.56 MB)  

Kaiser Family Foundation. (2011). State budgets under federal health reform: the extent and causes of variation in estimated impacts. Bovbjerg, R., Ormond, B., and Chen, V.