Hurdle Rates for Public Infrastructure and Private Investment: How Low Should We Go? Under 2% Real in Normal Times, and Still Lower Now

Must-Read: S. Dorn and M. Buettgens: The Cost to States of Not Expanding Medicaid:

If the nineteen nonexpansion states expanded Medicaid, they would see economic savings...

States that have expanded Medicaid report net budget savings, furthering the claim that nonexpansion states are losing out on potential economic savings. From 2017 through 2026:

  • For every $1 a state spends on Medicaid expansion, it draws in $7 to $8 from the federal government.
  • By expanding Medicaid, the 19 states that have yet to expand Medicaid would see an estimated $27 billion drop in uncompensated care spending.
  • If the 19 holdout states expanded Medicaid, the federal government would spend $43 billion less on uncompensated care and $129 billion less on marketplace subsides.

Conclusion: For most states with relevant analyses, net budget gains are expected for the foreseeable future, even after states begin paying 10 percent of expansion costs.

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