Most Of Medicaid’s $829 Million In “Savings” Comes From Taxes On Insurance Premiums

Most of the state’s estimated $829 million in “savings” on Medicaid spending from federal health care reform comes not from reduced costs, but from taxes on new insurance coverage generated by the new law.

A study by the Hilltop Institute found that the state government would come out $829 million ahead over the next 10 years because the new law would help cover 358,000 uninsured people, and this would produce $576 million in new premium assessments.

“The new revenue is essentially more volume of people,” said Chuck Milligan, executive director of the Hilltop research institute based at the University of Maryland Baltimore County. “It’s not a new tax, it’s just an increase in volume in an existing tax.”

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