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Will PPACA bankrupt Tennessee?

Will PPACA bankrupt Tennessee?

Posted by Dr. Steve Coulter | Tuesday, September 20, 2011

I’ve been following the debate of several governors who argue that PPACA will place an inordinate financial burden on their states with the expansion of Medicaid.

Sounds plausible. But what do the numbers say?

$5.4 Billion by 2019 – Without PPACA

Here in Tennessee, the total cost of Medicaid today is slightly over $8 billion per year. Since the federal government funds most of it, though, the state’s portion is just $2 billion. Left alone, those totals were projected to be $16 billion and $5.4 billion, respectively, by 2019.

630,000 More People – With PPACA

With PPACA, about 630,000 people will be newly eligible for Medicaid. A third currently have private insurance and the rest are uninsured.

$5.5 Billion by 2019 – With PPACA

Under PPACA, the new projections for 2019 are $18 billion and $5.5 billion, including the 630,000 newly eligible. The state’s portion of TennCare costs will be about $120 million per year more than it would have been without PPACA, a total of $1.2 billion over the 10-year span. In proportion, that’s less than 1 percent of the projected state budget.

Net Influx of $2.9 Billion – With PPACA

Also with PPACA, the federal spend takes a fairly dramatic increase in 2014 when full provisions kick in. For the same time period, this is an additional $13 billion that will flow into the state from the federal government. Offset somewhat by $9.19 billion in new federal taxes under PPACA, to be paid by the citizens of Tennessee, this creates a net influx of “new” money to the state (13 minus 1.2 minus 9.19 = 2.91), representing 0.39 percent of the GDP of Tennessee in 2009 dollars.

Bottom Line

In raw dollars, it’s a lot of money. But in proportion to the size of our state, it’s almost immaterial.

PPACA won’t bankrupt Tennessee. What are you worried that it will do?

Bottom Line: PPACA won’t bankrupt Tennessee. But what are you worried that it will do?