PALO ALTO (KCBS) — According to a new study from Stanford University, local and state governments could save billions of dollars on their health care costs if they were to shift thousands of public employees over to Obamacare.

California would save about $1.4 billion a year and taxpayers nationwide could save almost $12 billion if two groups of the country’s public employee sector—retirees under 65 and low-income government workers—were moved to coverage under the Affordable Care Act, the study found.

READ MORE: Fawn Fire Update: 'I See My Life Gone'; Thousands Forced To Evacuate; Arson Suspected As Blaze Burns Homes

Dr. Jay Bhattacharya, a Stanford University associate professor of medicine and health care economist who co-wrote the study with two other Stanford professors and a researcher, told the San Jose Mercury News that such a savings is “tempting” but acknowledged that public employee unions, whose benefits are covered by labor contracts, would challenge the findings.

In Chicago, public employee unions are fighting back against Mayor Rahm Emanuel, Obama’s former chief of staff, who is trying to move more than 30,000 retired city workers from their current health insurance to Obamacare.

Cities and states would still have to pay the penalty for not offering employees health insurance but, according the study, they would still save money.

READ MORE: UPDATE: Early Morning Crash Shuts Down Lanes On San Francisco-Oakland Bay Bridge

Bhattacharya said that, in California, 500,000 lower-income government employees would be affected as would 134,000 under-65 public sector retirees.

The study also concludes that the extra costs incurred would have to be picked up by the federal government—adding to the nation’s overall cost for Obamacare which is currently estimated at $1.4 trillion.

“It creates a huge problem for the federal government, but that’s not California’s problem,” Bhattacharya told the Mercury News.

MORE NEWS: 'Highway Slingshot Shooter' Fires Ball Bearings at Windows Along San Jose's Guadalupe Freeway

Gov. Jerry Brown’s budget staff said it had not yet review the study and neither did the Service Employees International Union Local 521, a spokeswoman there said.