Digging into that “ObamaCare ruling saves $84 billion” statistic

The Congressional Budget Office announced that the Supreme Court’s ObamaCare ruling would save the federal government $84 billion.  Pro-PPACA groups hailed this as a victory for socialised medicine.

Here is what the CBO said about the cost savings:

The Supreme Court’s decision has the effect of allowing states to choose whether or not to expand eligibility for coverage under their Medicaid program pursuant to the ACA. Under that law as enacted but prior to the Court’s ruling, the Medicaid expansion appeared to be mandatory for states that wanted to continue receiving federal matching funds for any part of their Medicaid program.3 Hence, CBO and JCT’s previous estimates reflected the expectation that every state would expand eligibility for coverage under its Medicaid program as specified in the ACA. As a result of the Court’s decision, CBO and JCT now anticipate that some states will not expand their programs at all or will not expand coverage to the full extent authorized by the ACA. CBO and JCT also expect that some states will eventually undertake expansions but will not do so by 2014 as specified in the ACA.

National Federation of Independent Businesses, et. al v. Sebelius was not only about the individual mandate; it was also about whether the federal government could force states to expand Medicaid; the Supreme Court ruled 7-2 against the federal government.

Legally, many states will not be forced to expand Medicaid and thus the federal government will spend less money, as it will implement less of ObamaCare/PPACA.  If you read beyond the headlines, this does not mean that the PPACA saves money; quite the opposite is true.

Finally, there is this gem:  CBO also said that 1.5 million of the people rendered ineligible for Medicaid by the Supreme Court’s ruling would have been eligible for the program if the health care bill had never passed into law. As it is, they now “will be less likely to become aware of and sign up for either program.”

(For more on the CBO’s assumptions as to the costs of ObamaCare, see Avik Roy’s post here.)

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Filed under Economics, ObamaCare

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