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Rebecca Farley

Director, Policy & Advocacy, National Council for Behavioral Health

CBO Reduces Forecast for States’ Medicaid Expansion

April 30, 2014 | Medicaid | Comments
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Last Wednesday, the Congressional Budget Office (CBO) reduced by one-third its estimate of how much more states will spend on Medicaid in the next decade because of the ACA. Under newly revised projections, the budget office said states that expand Medicaid will spend an additional $46 billion on the program, compared with a February estimate of $70 billion more. The agency did not specify the reason it reduced its estimate, but analysts said the mix of enrollees might be different than originally expected. The CBO has not changed its estimate of additional federal spending on Medicaid. As of February, it said that the federal government will spend $792 billion more on Medicaid in the next 10 years because of the healthcare reform law.

The federal government covers the full costs of enrollees newly eligible for Medicaid because of the ACA expansion from 2014 to 2016, and then states’ share will gradually rise until it reaches 10% in 2020. However, states still are responsible for between 27% and 50% of the costs of individuals who were eligible for the program prior to the expansion. It remains unclear if CBO’s lowered cost projections will affect states currently debating whether or not to expand their Medicaid programs. Twenty-six states already have expanded Medicaid, but the other states remain undecided or are against expansion.