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November 18, 2014

Matthews: How Two States Cut Medicaid and Saved Money


DALLAS – States are struggling with the explosive growth and cost of Medicaid, and those states that have accepted Obamacare’s Medicaid expansion will especially struggle when Washington stops covering the full cost in a few years. But Illinois and Pennsylvania have found ways to significantly curb Medicaid spending by redetermining enrollees’ eligibility, and other states should take note.

In a new publication from the Institute for Policy Innovation (IPI) entitled “How Two States Cut Medicaid and Saved Money,” resident scholar Merrill Matthews, Ph.D. says Medicaid is already the largest budget item for many states, and spending has exploded since Obamacare’s 2013 rollout to cover an additional 8.7 million people.

Facing a $2.7 billion shortfall for its Medicaid program, Illinois passed the SMART Act in 2012. Among its reforms, it established the Illinois Medicaid Redetermination Program to identify the eligibility of Medicaid enrollees, and consequently the state removed 234,000 individuals from the rolls for reasons such as failure to respond, moving out of state, change in employment, fraud and even death. The state continues to identify individuals to remove from the program.

Pennsylvania took a different redetermination approach and focused on the eligibility of the broader welfare population. The state removed 220,000 people from the welfare rolls, saving about $710 million. 

“The redetermination process is not a one-shot effort,” writes Matthews. “Every day thousands become eligible for Medicaid, and thousands no longer are. That process will be exacerbated by the president’s Medicaid expansion.”

“Many states will need to quickly address the serious Medicaid budget challenges they face, and a redetermination program is a good start,” said Matthews. “Getting ineligible beneficiaries off of the rolls allows the state to use that money for other purposes—or return it to the taxpayers.”

The Institute for Policy Innovation (IPI) is an independent, nonprofit public policy organization based in Dallas. Copies of “How Two States Cut Medicaid and Saved Money” are available at  IPI resident scholar Merrill Matthews, Ph.D. is available for interview by contacting Erin Humiston at (972) 874-5139, or




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