CBO: Obamacare to Cover Millions Fewer Than Before Supreme Court Decision

Kathryn Nix / July 24, 2012

Earlier today, the Congressional Budget Office (CBO) released an updated cost estimate for Obamacare that showed that the law will cost less over 10 years than last predicted—because fewer people will be covered.

Now, although Obamacare spends more than $1 trillion, CBO predicts it will leave 30 million Americans uninsured, falling far short of what was promised.

The reason for the changes to the law’s cost projection is the recent Supreme Court ruling. Though the Court allowed Obamacare’s individual mandate to stand as a tax, it deemed a separate provision—the Medicaid expansion—to be unconstitutional. As a result, states can choose not to expand their Medicaid programs and are no longer at risk of losing all their federal Medicaid dollars if they don’t. As Heritage health policy expert Nina Owcharenko explains, “If the Administration’s attempt to centralize health care decision making in Washington was unworkable, its unconstitutional imposition on the states has made its problems even worse.”

As a result of the Court’s decision, the outlook for the law has changed. Here are the main takeaways from the CBO’s latest report:

• Obamacare will cost less… The new CBO scoring shows that the net cost of Obamacare will be $84 billion less over the next 10 years than predicted in its last analysis in March 2012. Spending on the Medicaid and the Children’s Health Insurance Program expansion will fall by $289 billion, while increased spending on the exchanges to cover some of those who will no longer qualify for Medicaid will cost $210 billion. The law will now add $1.17 trillion in new government spending over 10 years—paid for by massive tax hikes on all Americans and robbing money from the Medicare program.
• …Because more people will be uninsured. Obamacare will cost less because it will insure fewer people. While the Medicaid expansion extended to all individuals below 138 percent of the federal poverty line, the exchange subsidies are only available to those earning between 100 percent and 400 percent of the federal poverty level, which means only a portion of would-be new Medicaid enrollees will qualify for subsidies. In 2022, this will add 3 million more to the number of Americans who will still be uninsured under Obamacare.
• Obamacare falls far short of its promise for universal coverage. Since day one, it’s been clear that Obamacare will not achieve universal coverage, and every time CBO revisits the law, the numbers show just that. In March 2010, when the law passed, CBO predicted that there would be 22 million people still without insurance in 2019. In March 2012, the estimate increased to 27 million in 2022. Now, the number has once again increased—to 30 million. So Obamacare leaves just as many people uninsured as it covers.
• Massive uncertainty underlies CBO’s estimate. According to CBO, “what states will be able to do and what they will decide to do are both highly uncertain. As a result…[the] estimates reflect an assessment of the probabilities of different outcomes…in the middle of the distribution of possible outcomes.” As CBO points out, states’ decisions to expand or not expand Medicaid hinge on a number of factors, including their budget outlooks. States that decide to expand would face “a large extra cost.”

Over the last two years, Obamacare has shown itself to be a law muddled with unintended consequences, unworkable provisions, and costly, ineffective new programs. Today’s report from CBO shows that Americans can expect this trend to continue, driving home once again that the health law will not achieve what it promised and needs to be repealed.