WASHINGTON — The Supreme Court decision on President Barack Obama’s health-care overhaul would probably lead to an increase in the number of people who wouldn’t become insured and a modest reduction in the cost to the federal government, compared with estimates before the court ruling, the Congressional Budget Office said Tuesday.
The court said, in effect, that a large expansion of Medicaid envisioned under the 2010 law was a state option, not a requirement.
As a result, the budget office said, it now predicts that 6 million fewer people will be insured by Medicaid, the federal-state program for low-income people. But half of them, it said, will probably gain private insurance coverage through health-insurance exchanges to be established in all states.
On balance, the budget office said in a new report, “about 3 million more people will be uninsured” in 2022.
With the increase in the number of uninsured, the budget office lowered its estimate of costs to the federal government.
“The insurance coverage provisions of the Affordable Care Act will have a net cost of [$1.168 trillion] over the 2012-2022 period — compared with [$1.252 trillion] projected in March 2012 for that 11-year period — for a net reduction of $84 billion,” or about 7 percent, the budget office said.
The federal government will subsidize coverage for most people who buy insurance through the exchanges, and the per-person cost to the federal government will be higher than if they were in Medicaid, the report said.
“For the average person who does not enroll in Medicaid as a result of the court’s decision and becomes uninsured, federal spending will decline by roughly an estimated $6,000 in 2022,” said Douglas Elmendorf, director of the Congressional Budget Office.
“For the average person who does not enroll in Medicaid as a result of the court’s decision and enrolls in an exchange instead, estimated federal spending will rise by roughly $3,000 in 2022 — the difference between estimated additional exchange subsidies of about $9,000 and estimated Medicaid savings of roughly $6,000,” Elmendorf said.
The latest estimate from the Congressional Budget Office establishes a new political and fiscal reality against which future health-care proposals will be measured. It also provides grist for election-year debates in campaigns for the White House and Congress.
A repeal of the new healthcare law, as House Republicans have repeatedly tried to do, would add $109 billion to federal-budget deficits over the next 10 years, the budget office said.
Specifically, it said, repeal of the law would reduce spending by $890 billion and reduce revenues by $1 trillion in the years 2013 to 2022.
“Repealing the [health-care law] will lead to an increase in budget deficits over the coming decade, though a smaller one than previously reported,” Elmendorf said in a letter to House Speaker John Boehner, R-Ohio.
HOUSE VOTED 30 TIMES
The House has voted more than 30 times to repeal part or all of the 2010 law or to choke off money needed for various provisions, including coverage of the uninsured.
Democrats in the Senate have vowed to preserve the law, which represents the largest expansion of social insurance in more than 40 years. And White House officials say Obama would veto repeal legislation if it ever arrives on his desk.
Democrats hailed Tuesday’s estimates as vindication for the president. “This confirms what we’ve been saying all along: the Affordable Care Act saves lots of money,” said Senate Majority Leader Harry Reid, D-Nev.
Actually, the government will spend more. It just won’t go onto the national credit card because the health-care law will be paid for with a combination of spending cuts and tax increases.
GOP leaders sought to shift attention from claims about the deficit and focused instead on the additional spending. “What we know from today’s CBO report ... is that the new health-care law is dramatically increasing health-care spending and costs,” said Senate Republican leader Mitch Mc-Connell of Kentucky.
Republicans said they remain unswervingly committed to repealing what they dismiss as “Obamacare.” When combined with other budget-cutting measures, GOP leaders say that repeal will ultimately reduce deficits. Romney says that if he is elected, he will begin to dismantle the law his first day in office.
NEWEST NUMBERS
The new numbers are the latest of several updates issued by the budget office since March 2010, when Congress gave final approval to the health-care legislation.
At that time, the budget office predicted that the measure would provide coverage to 32 million people, leaving 23 million uninsured.
In addition, the budget office said then that the expansion of coverage would cost $938 billion over 10 years, from 2010 to 2019. But, it said, the expense would be more than offset by revenues from new taxes and fees, and by savings squeezed from Medicare and other government programs. Taken together, it said, the health-care and revenue provisions of the legislation would reduce deficits by a total of $124 billion in the first decade.
Democrats have repeatedly cited those estimates when Republicans attack the law as creating a costly new entitlement.
However, Republicans assert that the true costs will be much higher than the initial estimates indicated. First, they note, the major costs — from expanding Medicaid and providing subsidies for the purchase of private insurance — will not show up until 2014.
In addition, Republicans say, the projected savings in Medicare may be impossible to achieve because, under the law, Medicare payments to health-care providers would fall further and further behind the providers’ costs.
FIRST GUESS SINCE RULING
The budget office report is the first official estimate of the effects of the June 28 court decision that upheld the core requirement in the Patient Protection and Affordable Care Act that most Americans must carry health insurance or pay a penalty.
The court threw out a provision that requires states that don’t comply with the Medicaid expansion to lose existing federal Medicaid funding. The court said Congress can require states to meet conditions to receive new Medicaid money.
The budget office said it is impossible to know how many states will opt out of the Medicaid expansion. At least eight Republican governors are balking, according to the Republican Governors Association.
“What states will be able to do and what they will decide to do are both highly uncertain,” the budget office said, without identifying any particular state. The estimates “reflect an assessment of the probabilities of different outcomes.”
The budget office predicted a “wide range” of state reactions to the ruling. Some states will forgo any expansion. Others “will try to work out arrangements” for a partial expansion to avoid a gap between people who get Medicaid and those who receive subsidies to buy insurance through an online exchange.
Other states may postpone any decision until after 2014, when the main provisions of the health-care overhaul take effect. The agency said its estimate represents the “middle of the distribution of the many possible outcomes arising from the Supreme Court’s decision.”
Information for this article was contributed by Robert Pear of The New York Times; by Brian Faler of Bloomberg News; and by Ricardo Alonso-Zaldivar, Andrew Taylor and Laurie Kellman of The Associated Press.
Front Section, Pages 1 on 07/25/2012