The CBO’s New Medicaid Numbers And The Cost Of Saving Lives

This week, the Congressional Budget Office updated its numbers on the cost of the health law, the Affordable Care Act. The verdict? Now that the Supreme Court has overturned part of the Medicaid expansion — thereby allowing states to opt out of this portion of the overhaul without penalty, the law’s cost will likely be around $84 billion lower over 11 years than previously estimated.

The score from the CBO had bloggers writing about what fate inclusion of the new numbers hold for coverage for the poor in America, and sounding off about a new study in the New England Journal of Medicine that found expanding Medicaid saved lives in three states.

Matt Salo, at the Health Affairs Blog, writes that the finding from the CBO might not be the last word from federal policymakers on the subject: “Ultimately state-level dynamics, such as the nuances of individual Medicaid programs, the Medicaid-Exchange interactions, and state fiscal conditions, combined with the Administration’s decisions about the optional aspects of the expansion will require policymakers to repeatedly revisit these estimates. … The ACA offers states many incentives.  Nonetheless, the reality is that for some states, the Medicaid expansion may not necessarily or immediately be a “no-brainer” as some have suggested. … While numerous entities are tracking state officials’ public statements about the Medicaid expansion, it is likely the decisions will shift dramatically over time for both policy and political reasons” (7/25).

Dan Diamond, writing at California Healthline, says the numbers “reframe the debate over the ACA yet again. As I noted last week, more than two-thirds of states are waffling on whether to participate in the law’s Medicaid expansion, and the new CBO numbers will offer new targets for supporters and opponents of ObamaCare to make their case. But the CBO score is also more of a political story than policy news. And as both parties continue to haggle over the ACA’s price and impact, keep in mind that the CBO’s projections about health law costs are often wrong” (7/26).

Avik Roy, at Forbes’ The Apothecary blog, points out: “Key to the CBO’s math is their guess that 6 million fewer people will enroll in Medicaid or its cousin, the Children’s Health Insurance Program (CHIP), while 3 million more people will sign up for the law’s subsidized exchanges for private insurance. … Now that several governors have come out against the Medicaid expansion, the CBO has budged a bit in their direction. ‘CBO anticipates that, instead of choosing to expand Medicaid eligibility fully to 138 percent of the [federal poverty level] or to continue the status quo, many states will try to work out arrangements with the Department of Health and Human Services (HHS) to undertake partial expansions. For example, some states will probably seek to implement a partial expansion of Medicaid eligibility to 100 percent of the FPL, because, under the ACA, people below that threshold will not be eligible for subsidies in the insurance exchanges.’ If all states were allowed to do this without any pushback from Washington, the impact to the deficit could be in the trillions” (7/24).

At the Atlanta Journal-Constitution’s Health Flock blog, Michele Madison worries what happens when states decide not to expand Medicaid: “It means that there will be millions of people who will not be eligible for Medicaid benefits and who also may not be able to afford the insurance through the state insurance exchanges due to their level of income. Moreover, it may be less expensive for these individuals to pay the penalty/tax instead of purchasing insurance. Therefore, one of the foundational tenets of the Healthcare Reform Act would be undercut” (7/25).

But in the meantime, a new New England Journal of Medicine report says three states that expanded their Medicaid programs saved lives.

At The Incidental Economist, Aaron Carroll and Harold Pollack examine assertions of the “questionable” quality of Medicaid in light of the NEJM study: “The bottom line is that, according to these findings, state Medicaid programs need only cover 176 additional adults to avert one additional death every year. This allows for a crude but intriguing cost-effectiveness calculation. Annual Medicaid costs for childless adults are roughly $6,000. The cost per averted death (176*6,000) is thus about $1 million. This $1 million figure is easily within the range of acceptable costs based on common, widely-supported interventions to save lives and improve health. … There’s been a wide, often misplaced debate over whether Medicaid helps or hurts its own recipients. We need to stop that. Medicaid helps” (7/26).

But Michael Cannon, at the CATO@Liberty blog, says that he expects that Medicaid, at a price tag of $460 billion per year, does save lives: “Even so, that does not mean politicians should expand Medicaid. If saving lives is the goal, then politicians should instead find the lowest-cost way of doing so, because that enables the greatest number of lives to be saved with the available resources. It is generally accepted among health economists that other strategies (e.g., discrete health programs targeted at hypertension or diabetes) could save more lives per dollar spent than expanding health insurance. This study says nothing about how much it costs to save lives through Medicaid, much less whether alternative uses of those resources could save even more lives” (7/26).