CBO: After Court Ruling, Health Reform Law To Cost Less, Cover Fewer

Last month's Supreme Court ruling on the Affordable Care Act will result in the overall cost of the law declining by $84 billion, while the estimated number of U.S. residents who will gain insurance under the law dropped by three million, according to updated estimates released Tuesday by the Congressional Budget Office, The Hill's "Healthwatch" reports (Baker/Viebeck, "Healthwatch," The Hill, 7/24).

The high court upheld the individual mandate in the ACA, but ruled that states could opt out of the Medicaid expansion.

Coverage-Related Findings

As a result, CBO now estimates that 30 million uninsured people will be covered by 2022, down from the 33 million it estimated before the ruling (Radnofsky, Wall Street Journal, 7/24).

The report also found that about six million fewer U.S. residents than previously expected will be covered by Medicaid because of states that opt out of the expansion. However, about three million of those people will purchase insurance from the health insurance exchanges, CBO estimates (Smith, Reuters, 7/24).

Medicaid Expansion

CBO in the report does not offer predictions on which states will expand their Medicaid programs, and instead makes a general forecast.

The report estimates that about one-third of "the potential newly eligible population" -- individuals with annual incomes below 138% of federal poverty level -- live in states that will fully expand Medicaid, while 50% live in states that will partially expand eligibility. The remaining newly eligible residents are in states that will not expand their programs (Pear, New York Times, 7/24).

Projected Costs

The overhaul is now expected to cost $1.168 trillion between 2012 and 2022.

CBO projects that the federal government will save about $289 billion because of states that opt out of the Medicaid expansion but that it will have to spend about $210 billion in subsidies for people who purchase coverage through the health insurance exchanges. Adjustments to other projects account for the remaining $5 billion (Wall Street Journal, 7/24).

Additional Findings

The report also found that:

• Premiums for private coverage will increase by about 2%, as enrollees will have lower average incomes and be in "somewhat poorer health"; and
• The federal government will collect about $55 billion in tax penalties from U.S. residents who go without insurance and $117 billion from employers that provide inadequate or no coverage to workers (New York Times, 7/24).

CBO Estimates Repealing the Overhaul Would Cost $109 Billion

In a separate report, CBO said House-passed legislation (HR 6079) that would repeal the ACA would increase the budget deficit by $109 billion between 2013 and 2022, Roll Call reports (Dennis et al., Roll Call, 7/25).

In March 2011, CBO estimated that the health reform law would reduce the federal deficit by $210 billion between 2012 and 2021 (Wasson, "On The Money," The Hill, 7/24).

The report found that repealing the law would eliminate new taxes and reductions in Medicare spending that are greater than the overhaul's outlay to expand coverage, the Journal reports (Wall Street Journal, 7/24).

In addition to shifting the time period, the latest estimate reflects the elimination of the CLASS Act, lower estimated Medicare costs and that additional health reform law funding already has been spent ("On The Money," The Hill, 7/24).