The Congressional Budget Office (CBO) just rendered its latest opinion on the cost of Obamacare following the Supreme Courts decision to uphold most of the law back in June.
The numbers arent pretty. Despite breathless media reports of additional savings, the governments bean counters actually exposed several flaws in the law that will, in the long term, lead to higher costs and reduced access to insurance coverage.
The High Court upheld the contentious individual mandate on the grounds that it is constitutional under Congresss power to tax but allowed states to opt out of Obamacares order that they expand Medicaid, the joint federal-state health insurance program for low-income Americans.
The law requires states to offer Medicaid to everyone making less than 138 percent of the poverty line just over $30,000 for a family of four. In exchange, the federal government covers the cost of the expansion for the first three years and 90 percent thereafter.
Sounds like a great deal for the states. But the administrative expenses involved in expanding the program will increase Medicaid costs for most states even during the period when the government foots the bill, according to a new survey conducted by the Government Accountability Office.
Further, the federal gifts are only for the newly eligible. States would still have to pay for their share of the cost of coverage for those who were eligible for Medicaid before the passage of Obamacare but hadnt enrolled. An estimated 14 million people fall into this category.
Thanks to the individual mandate, many of these previously eligible people will come out of the woodwork to sign up for Medicaid and comply with the law. That would add billions of dollars to already strained state budgets.
Its this woodwork effect that scares states most. And its why several states have opted out of the expansion.
Texas Governor Rick Perry says he wont be party to bankrupting my state in direct contradiction to our Constitution. Indeed, Texas would face $27 billion in additional costs through 2023.
Even a number of Democratic governors in Delaware, North Carolina, Missouri, Kentucky, Montana, and West Virginia have not yet decided whether to expand Medicaid in line with Obamcares dictates.
Virginia Governor Bob McDonnell has said that his state simply cannot afford this expansion. The Old Dominion would have to add 400,000 people to its Medicaid rolls.
If Virginia which recently announced a $129 million surplus cant afford it, then how can states with huge deficits, like New York ($982 million) or Illinois ($43.8 billion)?
The rising number of states saying, Thanks, but no thanks, to Obamacares Medicaid money led the CBO to revise its estimate of the laws costs. The agency estimates that the opt-outs will reduce federal spending by $289 billion.
Some of the folks that would have been eligible for Medicaid will seek coverage in the exchanges where its 50 percent more expensive than under Medicaid. As a result, federal spending on subsidies for the exchanges will rise by $215 billion.
But only a third of those eligible for Medicaid under Obamacares intended expansion of the program will qualify for subsidies on the exchanges. The remaining two-thirds have incomes that are too low, according to the law.
That puts the Obama Administration in the uncomfortable position of subsidizing health coverage for the middle class while leaving those with lower incomes to fend for themselves.
All told, the Supreme Court decision makes Obamacare $84 billion cheaper a paltry 7 percent of the laws total cost. Six million fewer people will be enrolled in Medicaid, and three million more will hit the exchanges. The three million remaining will be added to the uninsured rolls.
Obamacares champions have touted its efforts to expand access to health coverage, particularly for those at the bottom of the economic ladder.
The CBO report shows instead that the law subsidizes the health care of the middle class at the expense of those who are poorer and spends a trillion dollars to do so. That sure doesnt sound like the answer to our nations healthcare woes.