Now that the Supreme Court has ruled that states do not have to comply with ObamaCare's Medicaid expansion, the supposed budget savings of ObamaCare may evaporate further.
The Congressional Budget Office last estimated that ObamaCare would reduce the deficit by $210 billion over 10 years. But that was before the Department of Health and Human Services nixed the unworkable long-term care program, the CLASS Act, which resulted in a loss of $80 billion in revenue. That would reduce the deficit savings to $130 billion.
The further erosion may come from a quirk in ObamaCare that enables some people not eligible for Medicaid to join the insurance exchanges.
ObamaCare required all states to allow anyone with annual income up to 138% of the federal poverty level in their Medicaid program or forego all of their Medicaid funding. The Court threw that requirement out after 26 states joined a lawsuit to fight it.
If a state government decides not to expand its Medicaid program, the ObamaCare rules allow the citizens of that state between 100%-138% of the poverty level access to the insurance exchange. The cost of the federal premiums subsidies those people will receive through the exchange costs more than putting them in Medicaid.
A new analysis from the conservative Heritage Foundation estimates that putting these people in the exchange could cost an additional $34 billion over 10 years if only the 26 states involved in the ObamaCare lawsuit decided to forego expanding Medicaid. It would cost at least $62 billion if all states went that route.
Adding in the new costs to the exchanges from Heritage, and the 10-year deficit savings shrink to $68 billion to $96 billion.
"We're working backward from Congressional Budget Office numbers," said Drew Gonshorowski, a policy analyst at Heritage. "I think our numbers are a conservative estimate of the cost. But they could be much higher. There is a lot of uncertainty around this."
The CBO said Monday it's still assessing the Supreme Court decision on ObamaCare budget projections. It'll release new estimates in the week of July 23-27.
Yet the CBO can only score legislation that is put before it, not related costs that are not directly part of the legislation. That makes CBO estimates of deficit savings shaky.
Douglas Holtz-Eakin, a former CBO chief and now president of the conservative American Action Forum, released an analysis in June 2010 that counted $15 billion in administration and enforcement of insurance coverage and $50 billion in explicitly authorized health care grant programs that were not included in CBO's analysis. That would shrink ObamaCare's budget savings to $3 billion to $41 billion.