More Uninsured Likely Following the Supreme Court Decision

By Martha Heberlein

I’m not quite sure what it says about me, but I was eagerly checking the Congressional Budget Office’s website yesterday at 2pm awaiting the updated score of the ACA following the Supreme Court ruling. While they’re only estimates, CBO is the official arbiter in DC and their assessments carry a whole lot of weight inside the beltway.

According to CBO, the consequences of the ruling are as expected – in 2022, 6 million fewer people will be covered in Medicaid, 3 million more people will be covered in the Exchanges, and 3 million more people will be uninsured. As a result, federal spending on the insurance coverage provisions (i.e., those pertaining to the Medicaid expansion and exchange coverage) will decline by $84 billion over 2012-2022.

The lower spending comes about for a number of reasons. Despite the fact that subsidies in the Exchanges will be more costly than Medicaid coverage, just one-third of those who will be left without Medicaid due to their state’s failure to extend the program will fall into the income range (100% to 138% of the FPL) that allows them to qualify for subsidized Exchange coverage.  In contrast, two-thirds will be ineligible for coverage in the Exchanges because they have income below 100 percent of the federal poverty level. Additionally, those eligible for Exchange coverage will have to pay 2% of their income towards premiums, plus additional cost sharing – a potentially high price for a family making just above the poverty line – and so some will not be able to afford to participate and will remain uninsured.  As a result of all of these effects, the reductions in spending from lower Medicaid enrollment will more than offset the increased costs of coverage in the Exchanges.

In coming up with their estimates, CBO after carefully considering the many factors states will think about when deciding whether to extend Medicaid, said they believe that some states will move full steam ahead, others will completely forgo the expansion, and some may go part-way (if that’s an option CMS allows). However, they did not make predictions about which states would move forward and which wouldn’t, but instead looked at the proportion of all those who would have been eligible prior to the ruling and how they fit into those three broad categories. Got to say that’s a smart way to hedge your bets!

By 2022, CBO anticipates that about one-third of the potential new Medicaid population will be living in states that fully extend coverage to 138% of the FPL. Another half will reside in states that expand coverage, but to a lower income threshold. The remainder (one-sixth) will be in states that don’t extend Medicaid at all over the next ten years. They also believe that states will take some time to ramp up coverage – about a third of those who will ultimately become eligible will be in states that expand in 2014; another third will reside in states that expand in 2015; the remainder will be in states that take until 2016, 2017, or 2018.

While the numbers are full of uncertainty – as CMS hasn’t ruled on a number of potential issues and states are still mulling over the expansion – they provide some suggestion of where coverage may end up as a result of the Supreme Court ruling. I, for one, hope that they underestimate the share of folks who will eventually be covered under Medicaid as states determine that it’s in their best interest to do the right thing by extending Medicaid to more uninsured, low-income adults.