Health care law will cost less than previously estimated, CBO says

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In a widely anticipated revised estimate produced after the Supreme Court ruling on the health care reform law, the Congressional Budget Office on Tuesday reported that the 2010 Affordable Care Act will cost the government $84 billion less than previously calculated for the period from 2012-2022.

The nonpartisan office also released an estimate of the bill to repeal the health care law (H.R. 6079) that the House passed July 11. The repeal “would cause a net increase in federal budget deficits of $109 billion over the 2013-2022 period,” CBO said. The analysis of the controversial health care law by CBO and the Joint Taxation Committee says the “insurance coverage provisions of the ACA 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.” That calculation does not include the budgetary impact of other provisions of the health care law, which in the aggregate reduce deficits, CBO said.

“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,” budget analysts concluded. In its complex ruling, the high court upheld the law except its provisions requiring states to participate in a planned expansion of Medicaid. That prompted a reevaluation by CBO. “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 [health care law],” the budget office stated. “CBO and JCT also expect that some states will eventually undertake expansions, but will not do so by 2014 as specified in the ACA.”

In a letter to House Speaker John Boehner, R-Ohio, on the repeal bill, the agency wrote “on balance, the direct spending and revenue effects of enacting that legislation would cause a net increase in federal budget deficits of $109 billion over the 2013-2022 period. Specifically, we estimate that H.R. 6079 would reduce direct spending by $890 billion and reduce revenues by $1 trillion between 2013 and 2022, thus adding $109 billion to federal budget deficits over that period.”

CBO cautioned that neither of these reports represents a comprehensive revised estimate of the law’s budgetary effects.

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