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CBO Releases Analysis of Longer-Term Effects of Senate Legislation on Medicaid Spending

June 30, 2017

The Congressional Budget Office (CBO) and Joint Committee on Taxation released an additional analysis on the longer-term effect of the proposed Better Care Reconciliation Act of 2017 (BCRA) on Medicaid spending. As a result of the BCRA provisions on Medicaid, the CBO projects that spending would be reduced by $160 billion during 2026, as compared to current law. 

The analysis indicates that the largest effect spending under BCRA would be for Medicaid as a result of:

  • The elimination of the individual and employer mandates for health insurance coverage
  • Capping the growth in per-enrollee spending for nondisabled children and adults at no more than the medical care component of the consumer price index (CPI-M) and for disabled adults or adults age 65 or older at no more than CPI-M plus one percentage point
  • Starting in 2025, pegging the rate of growth for all groups at the CPI for all urban consumers

The CBO analysis, conducted at the request of the ranking members of the Senate Budget and Finance Committees, provides projections beyond 2026. CBO approximated spending growth, accounted for potential changes in Medicaid expansion eligibility, and estimated per capita caps.

While acknowledging that the estimate is “inherently inexact,” CBO notes that there will be a large gap—35 percent—that will grow between what Medicaid would have spent under current law and spending under BCRA.

As a result, CBO concludes by noting that states would likely have to achieve more efficient delivery of services, cut payments to health care providers, eliminate services, restrict eligibility for Medicaid, or some combination of all of these approaches. CBO states that under BCRA, there would be increasing pressures on states to use all of these strategies.

With the delay in Senate action on BCRA, HAP is encouraging members of Pennsylvania’s hospital community to speak out and email Pennsylvania’s U.S. Senators Pat Toomey and Robert Casey to urge the Senate to reconsider the proposed approach and to protect health coverage for all Pennsylvanians.

For additional information, contact Laura Stevens Kent, HAP's vice president, federal legislative advocacy.

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