CBO: Supreme Court decision cuts cost of healthcare reform by $84 billion

The Supreme Court’s decision to uphold most of President Obama’s healthcare law made the law less expensive but will result in 3 million more people without health insurance, the Congressional Budget Office (CBO) said Tuesday.

The report from the nonpartisan budget scorekeeper was the first estimate of the law’s cost since last month’s court ruling, which held that the states must be permitted to opt out of the law’s Medicaid expansion.

{mosads}CBO said the federal government would save roughly $84 billion due to the Medicaid change, though low-income people in the states that opt out might find it harder to afford insurance.

The scorekeeper also said that repealing the law, as Republicans have proposed, would increase federal deficits by $109 billion in 10 years.

The new estimates could help Democrats push back against GOP arguments that the Affordable Care Act is a budget-buster. CBO has consistently said the law will reduce the deficit through revenue increases and cost-controls for the healthcare system.

The senior Democrat on the House Budget Committee, Rep. Chris Van Hollen (Md.), criticized Republicans for voting repeatedly to repeal the healthcare law in light of the CBO report.

“Our Republicans keep talking about repealing the deficit, but they’ve now voted more than 30 times to bore a hole in the deficit by more than $100 billion,” he said.

The latest CBO estimate had some bright spots for Republicans, however. The new analysis gives them a chance to highlight the law’s tax increases, and the latest estimate lowered the cost of repealing the law from $210 billion.

“CBO exposed the president’s partisan health law for what it is: a massive expansion of government paid for with over a trillion dollars in tax increases, while increasing costs on the backs of middle-class families, job creators and states during the worst economic downturn in a generation,” Sen. Orrin Hatch (R-Utah) said in a statement.

Nationwide, roughly 6 million people will likely lose their Medicaid eligibility because their states will not participate in the Medicaid expansion, CBO said. About half of those people would be able to buy private insurance through the law’s state-based exchanges, with help from a federal subsidy.

The remaining 3 million will be uninsured, CBO said.

Between subsidies and Medicaid payments, the law’s coverage expansion now is expected to cost $1.17 billion over the next decade — $84 billion less than CBO’s last estimate.

CBO has consistently said the law’s spending would be offset by its combination of savings and new taxes, meaning the law as a whole would reduce the deficit. The budget office reaffirmed that assessment Tuesday, though it did not release a new estimate of the law’s total deficit reduction.

“The purpose of this bill was to drive down the cost of healthcare — the cost to the government and the cost to taxpayers,” said Rep. George Miller (D-Calif.), a strong supporter of the law. “The bill does that. If you start repealing it, the old system comes back with its out-of-control costs.”

Miller said GOP members are “acting like fools” by continuing to push for repeal.

“They’re obviously not interested in the facts,” he said.

Republicans have hammered the healthcare law as a tax hike since the Supreme Court upheld the individual mandate as a use of Congress’s taxing power. GOP lawmakers said the decision showed that Obama misled the public by insisting during the legislative debate that the mandate was not a tax.

“This law was built with smoke and mirrors to hide the impact of the trillions of dollars of new entitlement spending,” House Budget Committee Chairman Paul Ryan (R-Wis.) said in a statement Tuesday.

Obama and congressional Democrats have said that while the mandate is a use of the taxing power, it is technically a penalty — not a tax — because people can avoid paying it.

The court’s tax ruling and the renewed political debate haven’t changed the budget scorekeeper’s analysis of how the mandate will work. The CBO and the Joint Committee on Taxation (JCT) said payments from people who don’t buy insurance will bring in roughly $55 billion over 10 years.

“In earlier estimates, CBO and JCT expected that individuals would perceive the mandate as a requirement to purchase insurance or pay a penalty tax administered by the Internal Revenue Service,” Tuesday’s analysis said. “Because the court upheld the constitutionality of that arrangement, CBO and JCT continue to expect similar behavioral responses to the insurance requirement.”

Erik Wasson contributed.