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

By: Blue Sky Consulting Group

This is archived content; for historical reference only.

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.