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Which states will be most affected by ACA's Medicare cuts?

Report IDs eight states that will lost more than $20 billion

Topics: Health Policy, Market Trends, Strategy, Payer and Regulatory Policy, Medicare, Reimbursement, Finance

September 14, 2012

Eight states will lose more than $20 billion in Medicare funds over the next decade because of the cuts included in the Affordable Care Act (ACA), significantly more than other U.S. states, according to a new white paper from the University of Minnesota.

The analysis—authored by HSI Network researcher Robert Book and the American Action Forum's Michael Ramlet—uses updated estimates from the Congressional Budget Office on ACA's cost, which found that the law will reduce Medicare payments by $716 billion over the next 10 years.

Making the "reasonable assumption" that the Medicare spending reductions would be proportional to current fee-for-service payments, Book and Ramlet calculated the impact of the cuts across the country. They found that the cuts will not be uniformly distributed across U.S. states.

  • How will your organization be affected by the Affordable Care Act's impact and other industry trends? Use the Advisory Board's Total Margin Scenario Planner.

In the white paper, Book and Ramlet provide a state-by-state and county-by-county breakdown of the ACA's reductions.

According to their findings, a majority of U.S. states will see their Medicare funding reduced by less than $10 billion from 2013 to 2022.

However, eight densely populated states will see cuts of $20 billion or more. From 2013 to 2012, they estimated that:

  • California will lose $60.6 billion in Medicare fee-for-service and Medicare Advantage payments;
  • Florida will lose $44.4 billion;
  • Illinois will lose $22.5 billion;
  • Michigan will lose $22.3 billion;
  • New York will lose $39.9 billion;
  • Ohio will lose $21.2 billion;
  • Pennsylvania will lose $28.2 billion; and
  • Texas will lose $43.1 billion.

According to The Hill's "Healthwatch," the reductions will not affect beneficiaries. About one-third of the cuts would come from payments to Medicare Advantage plans, while the rest would come from lower provider reimbursement (Baker, "Healthwatch," The Hill, 9/12; University of Minnesota white paper, Sept. 2012).

Where does your state stand on Medicaid?

See our updated tracker of where states stand on the ACA's Medicaid expansion. Click to expand either a quick-to-scan graphic or an interactive graphic. (Note: interactive graphic may not be optimized for all mobile devices.)

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