CBO figures $84B saved by keeping health reform intact

The June 28 Supreme Court decision to uphold the health reform law will reap $84 billion in savings, according to a report released Tuesday by the nonpartisan Congressional Budget Office (CBO).

[See also: SCOTUS ruling retains individual mandate]

The CBO also noted that repealing the healthcare law would increase the deficit over the next decade by $109 billion because the law provides for increases in revenue and reduction in spending that more than offset the cost of expanding coverage for the uninsured.

CBO and the Joint Committee on Taxation (JCT) now estimate that the insurance coverage provisions of the Affordable Care Act (ACA) will have a net cost of $1,168 billion over the 2012–2022 period – compared with $1,252 billion projected in a CBO report issued in March 2012 for that 11-year period. The net reduction amounts to  $84 billion. The report notes that those figures do not include the budgetary impact of other provisions of the ACA, which in the aggregate reduce budget deficits.

[See also: Ruling on health reform expected to impact healthcare market]

“The projected net savings to the federal government resulting from the Supreme Court’s decision arise because the reductions in spending from lower Medicaid enrollment are expected to more than offset the increase in costs from greater participation in the newly established exchanges,” the CBO report asserts.

As a result of the court’s decision, an estimated 6 million people that were expected to be covered by an expansion of the Medicaid program will not be eligible for benefits because states will now be able to opt out of expanding eligibility for the poor.

The CBO explains it this way:

“The Supreme Court’s decision has the effect of allowing states to choose whether or not to expand eligibility for coverage under their Medicaid program pursuant to the ACA. Under that law as enacted but prior to the Court’s ruling, the Medicaid expansion appeared to be mandatory for states that wanted to continue receiving federal matching funds for any part of their Medicaid program. Hence, CBO and JCT’s previous estimates reflected the expectation that every state would expand eligibility for coverage under its Medicaid program as specified in the ACA. As a result of the Court’s decision, CBO and JCT now anticipate that some states will not expand their programs at all or will not expand coverage to the full extent authorized by the ACA. CBO and JCT also expect that some states will eventually undertake expansions but will not do so by 2014 as specified in the ACA."

The CBO report provides updated projections of the budgetary effects of the coverage provisions of the ACA to reflect the Supreme Court's recent decision.

The CBO also issued a report that presents a cost estimate for the repeal of the ACA that passed the House of Representatives on July 11th.