CBO releases updated cost estimates for health care law

SOURCE: Congressional Budget Office

Updated estimates released by the Congressional Budget Office today show that the Affordable Care Act will cost the federal government $84 billion less than previous projections.

SOURCE: Congressional Budget Office

Read more: Supreme Court upholds health care law, affirms coverage mandate

The CBO now estimates it would cost the federal government $1.168 trillion over the next decade to implement the Affordable Care Act’s insurance coverage provision, which includes funding the state Medicaid expansion, small business tax credits, and other subsidies to help individuals obtain health coverage through insurance exchanges. The CBO projected the cost to be $1.252 trillion back in March.

Most of the $84 billion reduction can be attributed to lowered Medicaid spending after the Supreme Court ruled that states cannot be compelled to expand Medicaid eligibility.

“As a result of the Court’s decision, CBO and [Joint Committee on Taxation] now anticipate that some states will not expand their [Medicaid] programs at all or will not expand coverage to the full extent authorized by the [Affordable Care Act],” according to the CBO report, “Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision.

Thus, federal spending for Medicaid and the Children Health Insurance Program (CHIP) is projected to be $289 billion less because 6 million fewer people would be enrolled in the government insurance programs for low-income families and children than if the Medicaid expansion was upheld.

Of the 6 million who won’t qualify for Medicaid without the expanded eligibility, about 3 million are expected to be enrolled in health plans through the state-run insurance exchanges, which would drive up federal spending for tax credits and subsidies by about $210 billion. The remaining 3 million individuals will likely stay uninsured.

Overview of CBO’s updated cost estimates of the Affordable Care Act: 

Current estimated net cost to implement the insurance coverage provision of the Affordable Care Act from 2012 through 2022: $1,168 billion (compared to $1,252 billion projected in March 2012)

SOURCE: Congressional Budget Office, Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision released on July 24, 2012 – page 2

 

Net reduction in spending to implement the insurance coverage provision of the Affordable Care Act from 2012 through 2012: $84 billion

SOURCE: Congressional Budget Office, Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision released on July 24, 2012 – page 2

 

Reduction in federal spending on Medicaid and CHIP expansion: $289 billion

SOURCE: Congressional Budget Office, Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision released on July 24, 2012 – page 4

 

Increase in federal spending as a result of 3 million more people enrolled in insurance exchanges: $210 billion

SOURCE: Congressional Budget Office, Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision released on July 24, 2012 – page 4

 

Impact of the Supreme Court’s decision to repeal the state Medicaid expansion provision of the Affordable Care Act:

  • 6 million fewer people will be covered by Medicaid and CHIP by 2022
  • 3 million more people will be enrolled in insurance exchanges by 2022
  • 3 million more people will be uninsured by 2022

SOURCE: Congressional Budget Office, Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision released on July 24, 2012 – page 4
 

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