Arizona’s Medicaid Expansion Will Cost $1 Billion Dollars a Year

New Study Shows Actual Cost to Arizona Taxpayers

Dallas, TX (December 9, 2013) – Arizona’s Medicaid expansion will cost the state’s taxpayers almost a billion dollars a year within a decade, according to a new study from Health Systems Innovation Network (HSI) and the National Center for Policy Analysis (NCPA).

Medicaid expansion is often touted as a “no brainer” for states, as the federal government promises to pay 100% of the costs through 2016 and 90% thereafter.  But, as the saying goes, there’s no such thing as a free lunch.

Medicaid expansion will cost Arizona taxpayers plenty, despite what they have been told by those supporting expansion of the program. Many people will drop private coverage to take advantage of the free public coverage.  The number of Medicaid enrollees will swell far above initial projections, and the cost to Arizona taxpayers will be higher than advertised:

  • The number of privately insured individuals could fall by 333,000 in 2014 alone. By 2023, there could be 450,000 fewer privately insured Arizonans than there would be without the Medicaid expansion.
  • The net number of Medicaid participants could increase by 1.07 million people in 2014 and by 1.65 million within the next 10 years.
  • The total cost to the state of covering these new Medicaid beneficiaries could reach $906 million annually within the next decade.

Arizona’s Governor Jan Brewer has insisted upon expanding Arizona’s Medicaid program, but the actual costs to Arizona taxpayers have been masked. In addition to the extra $906 million in annual Medicaid costs, the Affordable Care Act will significantly impact the cost of private insurance in Arizona, with some premiums nearly doubling over the next decade.

To schedule an interview with Arizona-based study co-author Michael Bond, contact Caytie or Kathleen.

Full text: Michael Bond and Stephen T. Parente, “The Impact of State Medicaid Expansion in Arizona,” December 9, 2013.


HSI Network is an LLC launched in 1998 delivering state-of-the-art academic analysis for practical use in health industry and health care policy-making. The HSI Network’s health insurance economic simulation model analyzes public and private insurance claims data, state Medicaid data, and the MEPS Household Component to predict the take-up of private health insurance and Medicaid under the Affordable Care Act in Arizona. The model was originally funded by the Department of Health and Human Services to estimate enrollment and premium impacts of high-deductible plans. It has recently been used by multiple government agencies and was cited by five Supreme Court justices in the Affordable Care Act. 

Michael Bond is senior lecturer of finance at the University of Arizona and a senior fellow at the National Center for Policy Analysis.

Stephen T. Parente is the Minnesota Insurance Industry Chair of Health Finance in Carlson School of Management and professor in the Finance Department at the University of Minnesota, the Director of the Medical Industry Leadership Institute at the University of Minnesota and Managing Principal at Health Systems Innovation Network.