Love it or hate it, the Congressional Budget Office’s (CBO) opinion carries weight and drives headlines. While much of official Washington is relaxing during Congress’s August recess, the budget gnomes in a spreadsheet finally disclosed their coverage estimates for the budget reconciliation package signed into law on July 4.
Overall, CBO believes that the law will increase the number of uninsured by 10 million as of 2034 — 7.5 million from Medicaid, about 100,000 from Medicare (due solely to a change in eligibility for certain immigrant populations), 2.1 million from the Exchange provisions, and another 300,000 via interactions from the various policies.
In many ways, the estimates amount to a Rorschach test, allowing people to speculate whether, and why, individuals will lose coverage due to the legislation’s new verification requirements. That debate will help to define opinions of the law in the coming years as its provisions take effect.
Work Requirement Verification
The coverage estimates represent a mix of the cautious and the curious. In the former category falls the anticipated impact of work requirements, which CBO says will increase the uninsured by 5.3 million by 2034. Sections regarding eligibility verification (other than work requirements) in Medicaid and the Exchanges will increase the uninsured by 700,000 each, making these three provisions responsible for roughly two-thirds of the coverage losses overall.
Given study results in recent months suggesting that non-working Medicaid recipients spend an average of over six hours per day socializing and engaging in leisure activities, a community engagement requirement for program recipients seems reasonable. The estimates suggest that CBO believes either that many recipients will not comply with the new requirement, or they will get trapped in red tape and lose their coverage for lack of proper documentation (as opposed to not working).
Critics of the law believe the latter will occur much more than the former. But with the Left and the media (but I repeat myself) watching closely, states will have every incentive to implement the work requirements in a prudent fashion. They should make sure beneficiaries’ work and income status get documented without unduly burdening recipients, for instance by utilizing reliable third-party data when available.
Immigration Impact
Immigration represents another source of coverage changes, as the bill limits eligibility for Medicaid, Medicare, and Exchange insurance subsidies. In all three cases, lawful permanent residents, aliens granted the status of Cuban or Haitian entrants, and those subject to the Compact of Free Association represent the only categories of non-citizens eligible for subsidized coverage.
CBO believes these changes will increase the number of uninsured by roughly 1.4 million — 100,000 in Medicaid, 100,000 in Medicare, and 900,000 on the Exchanges. Another 300,000 will lose coverage due to a related provision, which ends a policy from Obamacare that allowed “qualified” aliens who cannot receive Medicaid benefits during a five-year waiting period (established in the 1996 welfare reform law) to receive subsidized Exchange coverage instead.
Individuals of all political stripes may support these provisions as a reasonable attempt to restrict taxpayer-funded coverage to citizens and limited other groups. As I have frequently noted, none other than Hillary Clinton said in September 1993 that “We do not want to do anything to encourage more illegal immigration into this country. We know now that too many people come in for medical care, as it is. We certainly don’t want them having the same benefits that American citizens are entitled to have.”
Increase in ‘Projected Uninsured?’
A more curious interpretation of the law came from CBO’s estimate of Section 71114 of the new law. This section sunset, effective Jan. 1, 2026, a provision in Democrats’ 2021 Covid spending spree that temporarily increased the federal Medicaid match rate for non-expansion states (like Florida and Texas) should they choose to join the expansion to able-bodied adults.
But Section 71114 didn’t take anything away from anyone, or any state, now — all it did was prevent states from receiving something in the future. The idea that this provision would somehow “increase the uninsured” seems, if not laughable, at least highly speculative. This 100,000 “uninsured” estimate comes from a decrease in the probability that some hypothetical non-expansion state might in some hypothetical future year decide to expand to able-bodied adults.
Most ordinary Americans wouldn’t call this an “increase in the uninsured” by any stretch. Yet CBO categorized it as such and the media will dutifully report the 10 million overall figure without providing granular explanations about where it came from, or some of the dubious assumptions behind it.
As with many policies in Washington, there’s more than meets the eye. Unfortunately, people wanting to use the CBO estimates as a political cudgel may not look, or may not wish to look, past the headline.