New Spending from Filling the Medicaid Coverage Gap Outweighs Cuts in Disproportionate Share Payments

Brief

New Spending from Filling the Medicaid Coverage Gap Outweighs Cuts in Disproportionate Share Payments

Abstract

This paper provides estimates of the increase in federal subsidies under two provisions of the Build Back Better Act (BBBA) that would flow to people below the federal poverty limit in the 12 states that have not expanded Medicaid (people in the “Medicaid gap”). These subsidies are compared to the cuts in federal DSH payments also proposed in the bill. We estimate that in a year when Medicaid gap subsidies are provided, hospitals in the 12 nonexpansion states would see more than $6.8 billion in new spending for people in the Medicaid gap as a result of the coverage expansions, about 15 times larger than the expected DSH cuts of $444 million. Overall new federal health subsidies for people in the Medicaid gap going to nonexpansion states would be more than $19 billion.

Research Area: 

Centers

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