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The Fiscal and Economic Impacts of the Medi-Cal EHR Incentives

Blue Sky Consulting Group

The Medi-Cal EHR Incentive Program could provide up to $2 billion in federal incentives to eligible California providers and result in more state revenues and thousands of jobs.

In 2009, as part of the Health Information Technology for Economic and Clinical Health (HITECH) Act, the federal government approved $18 billion in funds to encourage the use of electronic health records (EHRs). In California, this means the Medi-Cal EHR Incentive Program will provide $1.4 billion to $2 billion to eligible providers. To assist states participating in the program, the federal government will also pay 90% of the administrative costs.

This analysis demonstrates that using state funds to draw down the federal administration grant and incentive payments would result in a substantial net benefit to the state's general fund due to the economic and fiscal effects of the additional federal funds flowing to California.

Specifically, it is estimated that:

  • Over the next nine years, by spending $5.2 million for administrative costs, the state would experience an increase in sales, income, and corporation taxes of $109 million.
  • California would benefit from an additional $2.3 billion in economic output and 16,000 new jobs as a result of the influx of federal funds.

Already the California Health Care Foundation has invested more than $800,000 to support the development and implementation of the Medi-Cal EHR Incentive Program. Two of these grants enabled the California Department of Health Care Services to draw down $3.6 million in federal matching funds.

The complete report is available under Document Downloads.

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