Healthcare Subsidies Increase in New Budget

Friday, 12 Apr 2013 03:57 PM

By Courtney Coren

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Changes the Supreme Court made to the healthcare law have caused a 27 percent increase in healthcare subsidies in the White House budget released on Wednesday over projections made in the 2013 budget.

The 2014 budget projects that the government will spend $606 billion on subsidies from 2014 to 2021 compared with the $478 billion estimated in 2013. This is a 65 percent increase over estimates in the 2012 budget, Politico reports.

The increase is attributed to changes the Supreme Court made to the healthcare law, when they ruled that the Medicaid expansion would be optional for states.

In states that chose to opt out of the Medicaid expansion, those citizens otherwise covered by Medicaid will be covered by subsidies provided for the exchanges. While some states have chosen to opt out of the Medicaid expansion, many more have yet to decide — which could increase costs even more.

The subsidies for individuals who are 100 percent to 400 percent below the poverty level are very expensive, especially for those closer to 400 percent.

The Congressional Budget Office projects that the subsidies could cost as much as $9,000 per person a year compared with $6,000 a year for a person covered by Medicaid.

The CBO also estimates that the changes made by the Supreme Court could save the government approximately $80 billion through 2022. Medicaid spending did decrease in the budget by about $135 billion in 2020.

Len Nichols, director of the Center for Health Policy Research and Ethics at George Mason University who also supports the healthcare law, says that the Supreme Court decision could be “a blessing in disguise.”

“It provides some savings upfront, which is welcome and will give states some time to buy in,” Nichols told Politico.

There are still many unknown variables that will affect the financial burden the federal government will bear. Several states that have yet to decide if they will offer state-based exchanges and whether or not they will offer an expansion to Medicaid. And it is also unknown how much insurance premiums will cost as insurance companies are still assessing the price for insurance based on the new health care law, which could also increase subsidies.

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