The Supreme Court decision that threw out part of President Barack Obama’s health-care overhaul will cut the law’s cost and leave more people uninsured, according to the Congressional Budget Office.
About 3 million fewer Americans will receive insurance coverage as a result of the court decision, which voided a provision to require states to expand Medicaid coverage for the poor, the nonpartisan agency said today. The cost of expanding coverage will shrink by $84 billion, CBO said.
It is the first official cost estimate of the court’s June 28 decision to uphold the 2010 law’s requirement that most Americans carry health insurance or pay a penalty.
In February 2011, CBO predicted that the health-care law would provide coverage to 33 million previously uninsured Americans by expanding Medicaid and setting up markets where consumers could buy insurance. The law would reduce the US deficit by $210 billion over a decade, CBO said at the time.
The Medicaid expansion, to take effect in 2014, is designed to extend eligibility to those with income up to 138 percent of the federal poverty line. The program has generally been limited to pregnant women, families with dependent children, the disabled and the elderly poor.
Previously, states that didn’t comply with the expansion were to lose all or part of their federal Medicaid funding. Instead, the Supreme Court said Congress can require states to meet conditions to receive new Medicaid money, though it can’t take away existing funds.
At least eight Republican governors are balking at the expanded Medicaid coverage, according to the Republican Governors Association.
Opting out would create a gap in coverage. The lowest- income Americans would continue to receive coverage through the existing Medicaid plan. States set their own income criteria, with 17 limiting enrollment for parents to those earning less than half of the official poverty threshold, which last year was $18,500 for a family of three.
People who make between 100 percent and 400 percent of the poverty line will receive federal subsidies to help them buy insurance. Those whose earnings exceed the state income criteria though don’t qualify for federal subsidies would receive nothing.
Hospitals may press states for the Medicaid expansion, because the law reduces special government payments to those that treat a large share of uninsured people on the assumption those people would instead be covered through Medicaid.
The Medicaid expansion and insurance subsidies together were projected to cost $1.083 trillion, CBO said in March.
Also today, an independent study by consulting firm Deloitte LLP said most companies expect higher costs as a result of the law and are preparing to revise employee health programs to share the burden. About 69 percent of companies surveyed plan to increase workers’ deductibles and co-payments in the next three to five years, and 68 percent will raise employee premium contributions, Deloitte said.
In the survey of 560 companies, 26 percent of those with 50 to 100 employees said they aren’t prepared to implement or respond by 2014 to the provisions taking effect that year. About 9 percent of all companies surveyed said they expect to drop employee health insurance within one to three years, and 10 percent say they’re undecided as to whether to maintain coverage, the study showed.
While employers aren’t required to offer health insurance, penalties will be imposed starting in 2014 for those with more than 50 workers that don’t meet government standards for affordable coverage. Businesses with fewer than 25 full-time workers are eligible for tax credits to help pay for insurance.