The Affordable Care Act is a substantial reform of the U.S. health care insurance system. Many states including Pennsylvania are currently weighing options for implementing a key provision of the Act: the expansion of Medicaid eligibility to individuals with incomes below 138% of the federal poverty level. Using the RAND COMPARE model, researchers at RAND and the University of Pittsburgh assessed the potential economic effects on Pennsylvania of the Affordable Care Act both with the Medicaid expansion and without it. The report found that with or without the expansion of Medicaid, the act will increase insurance coverage to hundreds of thousands of Pennsylvanians, but the analysis estimates that the Medicaid expansion would cover an additional 350,000 people and bring more than $2 billion in federal spending into the state annually than if the state did not expand. Should the state expand Medicaid, the additional spending will add more than $3 billion a year to the state's GDP and support 35,000 jobs. But Medicaid expansion is not without cost for the state; the estimated cumulative effect on Pennsylvania's Medicaid spending will be $180 million higher with the expansion than without between 2014 and 2020. Substantial reductions in uncompensated care costs for hospitals are possible even without expansion, but savings to hospitals for uncompensated care funding are even larger with the Medicaid expansion, amounting to $550 million or more each year.

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