The Congressional Budget Office projects that the Supreme Court’s health care reform decision will leave 3 million people who would have otherwise been covered under the Affordable Care Act without insurance, but will reduce the 10-year price tag of the law by $84 billion. The new projections suggest that the GOP’s recently renewed effort to repeal the entire law would increase 10-year budget deficits by over $100 billion.
The court upheld the law’s core provisions late last month, but it also ruled that a provision requiring states to expand Medicaid eligibility up to 133 percent of the federal poverty line amounted to unconstitutional coercion — and effectively made the expansion optional.As a result, CBO now estimates that, by 2022, six million fewer people will be enrolled in Medicaid than they projected before the Court’s decision. About half of those people will go without insurance, according to CBO, while the other half will enter Obamacare’s government-regulated insurance exchanges and receive federal subsidies to purchase private coverage.
The subsidies will cost the government $210 billion over 10 years — but the federal government will simultaneously save $289 billion thanks to reduced Medicaid spending. Combined with $5 billion in miscellaneous upward budgetary revisions, the net result is that the law is projected to cost $84 billion less than it was before the Court ruled.
This contradicts an analysis by conservative economist, and former CBO director Douglas Holtz-Eakin, who in a Tuesday statement argued that “[b]ased on information already available to CBO and others…the cost of the ACA could rise between $72 to $80 billion between 2014 and 2021 if the six already publicly announced states opt out of the Medicaid expansions. Alternatively, the maximum potential federal budgetary exposure – in the unlikely scenario all 50 states opted-out – would be an increase of $562 to $627 billion.”
However, Holtz-Eakin qualified his analysis. “Importantly, although the budget impact of the ACA may have changed, we do not expect CBO to change its projections significantly, as it does not yet have the information to resolve the potential swings in costs,” he added.
“This confirms what we’ve been saying all along,” said Senate Majority Leader Harry Reid in response to the CBO’s revisions. “The Affordable Care Act saves lots of money.”
House Republicans recently passed legislation to repeal the entire ACA. In a separate analysis, CBO adjusted its projections of the budgetary impact of full repeal to account for the Supreme Court’s ruling. If the GOP got its way and did away with the law, they would increase deficits over 10 years by $109 billion, and leave tens of millions of people uninsured.