CBO: Repealing health law’s exchange grants would save $14B

Congress could save roughly $14 billion over the next decade by repealing grants to help states set up the health insurance exchanges established by the healthcare reform law, according to the Congressional Budget Office.

CBO also said eliminating the planning grants would lead fewer people to enroll in the exchanges.

{mosads}The House Energy and Commerce Committee passed a bill earlier this month to repeal the planning grants. CBO released its score of that bill Wednesday evening.

The exchanges, envisioned as a one-stop marketplace for individuals and small businesses to buy insurance, aren’t scheduled to be put into place until 2014. The Health and Human Services Department wants each state to run its own exchange, but has the power to set up a federally run fallback in any states that choose not to take on the task. 

According to CBO, spending on planning grants to the states is expected to total $1.9 billion. But the total effect of eliminating those grants is higher, according to CBO, because doing so could lead to various delays and challenges in establishing the exchanges, making them less attractive to potential customers.

Many people who buy coverage through an exchange will be eligible for federal subsidies under the healthcare law. But if states don’t get planning grants, CBO said, they likely won’t get their exchanges up and running as quickly, and some would probably opt to let HHS take over — leading to a decline in enrollment and thus the amount of subsidies the government would have to pay.