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Financial implications of restoring medicaid coverage.

Eliminating the Hyde Amendment and restoring Medicaid coverage for abortions would allow poor women to decide freely whether to terminate an unplanned pregnancy or to bear a child. It would also save taxpayers millions of dollars annually in medical and social welfare costs. Both prochoice advocates and antiabortion supporters have traditionally shied away from discussing the financial consequences of restoring Medicaid coverage, because they do not want to appear to put a price tag on human life. However, since antiabortion activists have sometimes characterized funding restrictions as cost-saving measures, (134) it seems appropriate to point out--particularly in light of welfare-reform proposals that would deprive women of AFDC benefits if they have a child, as away of reducing costs--that in fact the reverse is true.

Expenditures for Medicaid Abortions

If public funding were restored, the federal and state governments together would spend approximately $137 million annually--$64 million in state expenditures and $73 million in federal expenditures--to provide abortion services to Medicaid-eligible women (Figure 8 and Table 1). (135) The federal government's expenditures would represent its share of the cost of abortions provided in both the states that currently pay for abortion and those that do not. The effect on a particular state's expenditures would depend both on whether it is currently covering abortions and on its federal Medicaid matching rate (the percentage of its Medicaid costs for which the state is reimbursed by the federal government). These matching rates vary from state to state and range from 50% to 80% of the total cost.

States that are currently covering abortion services for Medicaid recipients would no longer have to assume the cost entirely from their own coffers. The federal government would begin sharing the cost of abortion procedures in these states, immediately reducing state expenditures by at least half and perhaps much more, depending on each state's federal matching rate. In New York, for example, where the matching rate is 50%, the state's current expenditure for abortion coverage of $20,500,000 would be reduced to a little over $10,000,000. (136) Twenty-five of the 37 states that were not covering abortions under Medicaid in FY 1992 would spend less than $500,000 annually if the Hyde restrictions were eliminated.

Savings from Medicaid Abortions

In the absence of Medicaid coverage, at least one in five--and perhaps more than one in three--Medicaid recipients who would have had a publicly funded abortion carries her pregnancy to term. (137) When a baby is born to a Medicaid-eligible woman, the government spends more than $6,800 on prenatal and delivery services, neonatal and pediatric care and financial and support services, such as AFDC, food stamps and the Women, Infants and Children (WIC) program, in the two years following the birth. Every dollar spent to implement a policy of funding abortions for poor women would save approximately four dollars in these public medical and welfare expenditures; in some states, the ratio of costs to benefits would be considerably higher. (138)

In those states already covering abortions under their Medicaid programs, the savings currently being realized would continue. Those states that are not now funding, however, would avert sizable costs currently being incurred.

* For example, in the first full year of restored funding, Florida could be expected to spend $1.4 million to cover abortions under its Medicaid program; as a result of those expenditures, the state would save an estimated $5 million in medical and welfare cost that would have been spent over the next two years. (139)

* Illinois, which would have the greatest new expenditures for abortion services ($4.6 million), would be expected to save the most--an estimated $14 million over the first two years.

Altogether, the states and the federal government would save about $612 million in public medical and welfare expenditures over the two-year period following restoration of public funding of abortions by averting medical care costs related to delivery and short-term health and welfare expenditures. The states would save about $251 million and the federal government would save approximately $361 million.

The distribution of these savings could shift, of course, if Congress makes significant cuts in welfare benefits, and the states are forced to assume a greater proportion of medical and social welfare expenditures. One way or another, however, society will have to bear the costs of providing medical care and support services for Medicaid recipients who are not able to terminate unwanted pregnancies.

(134.) Donovan, 1985, pp. 155,157.

(135.) See sources for Table 1, columns 13 and 15.

(136.) These state "savings" are not included in the calculation of savings in column 13 of Table 1, which are estimates of savings from births averted only, not from the switch from state funding to federal funding.

(137.) Trussell et al., 1980, p. 127; CDC, 1980.

(138.) Torres et al., 1986, p.115.

The government spent almost $6,800 in 1985; it spends more today, since costs have increased. The ratio of costs to benefits would range across states from 2:2 to 8:9 (p. 116).

(139.) If funding is ongoing, the first-year portion of the two-year savings from abortion funding in one year would overlap with the second-year portion of the savings from abortion funding in the prior year. The result of ongoing funding, therefore, would be annual savings equivalent to the full two-year savings from any one year of abortion expenditures.


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Savings from Abortion Funding

If Medicaid coverage of abortions were restored, the states and federal
government together would save in public medical and welfare
expenditures over the next two years more than four times what they
would spend on abortions.

 State Federal

Estimated cost of
restored abortion funding $64 $73 $137
Estimated savings from
restored abortion funding $251 $361 $612

Source: Estimated state and federal expenditures--For states where
Medicaid currently covers abortions, D. Daley and R.B. Gold, "Public
Funding for Contraceptive, Sterilization and Abortion Services, Fiscal
Year 1992," Family Planning Perspectives, 25:244-251, 1993; for other
states, assumes an average abortion cost of $445, which was the 1992
average of $396 in funding states adjusted for inflation to 1994.
Distribution of expanditures and savings to state and federal
governments is based on the FY 1995 federal matching percentages,
Effectives October 1, 1994--September 30, 1995 (Fiscal Year 1995),"
Federal Register, 58:66363, 1993. Estimated state and Federal
Savings--Calculated using the benefit/cost ratios for each state, which
range from 2.2 to 8.9, as reported in A. Torres et al., "Public Benefits
and Costs of Government Funding for Abortion," Family Planning
Persectives, 18:111-118, 1986. See Table 1 for data on estimated
expenditures and savings in each state.

Notes: Estimated savings assume that 20% of Medicaid-eligible women are
unable to obtain abortions when Medicaid excludes abortion services. If
a larger proportion are unable to get abortions, then savings would be
greater than those shown here. State savings related to prenatal care
and delivery services and health and welfare expenditures for two years
after a birth; they do not include state savings of abortion expenditure
that would be paid instead by the federal government (for states now
funding abortion with their own money).

Note: Table made form bar graph.
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Publication:The Politics of Blame: Family Planning, Abortion and the Poor
Article Type:Topic Overview
Geographic Code:1USA
Date:Jan 1, 1995
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