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A state-transition model of HIV disease was used to project the costs to Medicaid, Medicare, and AIDS Drug Assistance Programs of proposed Section 1115 Medicaid demonstration projects for the early treatment of HIV-infected patients in Georgia and Massachusetts. Neither demonstration project was projected to meet 5-year tests of no increase in Federal spending and in both States average patient costs to all payers were highest in the first year after enrollment. In assessing expanded health care access for patients with chronic diseases, government payers should consider overall budgetary effects and separately analyze costs for each year's enrollees to avoid creating incentives to cap enrollments.
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