CBO: With Medicaid opt-outs, Affordable Care Act costs $84B less

The Congressional Budget Office is out with its analysis of how the Supreme Court decision will impact the Affordable Care Act's budget. The big ticket takeaway is this: The non-partisan scorekeeper estimates that 3 million people fewer people will gain coverage due to states opting out of the Medicaid expansion, resulting in $84 billion less in federal spending.

Let's break down those numbers a bit. The Congressional Budget Office does not list out which states could pass up the Medicaid expansion. But it does predict that "some states will probably forgo the expansion entirely."

The CBO then estimates that for every person who does not enroll in Medicaid because of that, and goes uninsured, the federal government saves $6,000 in spending by 2022. For the average person who does not enroll in Medicaid, but instead gets subsidized coverage from the health insurance exchange, the federal government spends $9,000 - $3,000 more than they would have had those individuals been in Medicaid.

"With about 6 million fewer people being covered by Medicaid but only
about 3 million more people receiving subsidies through the exchanges
and about 3 million more people being uninsured...the projected decrease in total federal spending on Medicaid is larger than  the anticipated increase in total exchange subsidies," the CBO concludes.

For those who want to see that in graph form, the CBO has got you covered:

If anything, this report suggests that the CBO is taking the threats of states not to participate very, very seriously. It only expects that only a third of those eligible for the Medicaid expansion will live in states that participate in the program the first year its available. Another third will live in states that delay by more than a year. That would fall in line with the history of states enrolling in Medicaid: When the program launched in 1966, just six states initially participated.

In making their decisions, states will face different incentives depending on their overall
budgetary situation," the CBO writes, after consulting with numerous state officials. Other factors, like politics, could matter too. As the CBO notes, "States often have different preferences regarding their policies even when facing the same incentives."

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