The Congressional Budget Office's new price tag for health reform

Here's how the Congressional Budget Office neatly explained its revised projection for insurance coverage and costs, now that the Supreme Court made optional one major provision to decrease the number of uninsured under the health reform law: More uninsured, more coverage through exchanges, less Medicaid growth.

States may ignore a provision in the health reform law to expand eligibility for Medicaid without the risk of a penalty after the Supreme Court's recent decision on the health reform law.

The CBO said compared with pre-Supreme Court decision projections, Medicaid and the Children's Health Insurance Program will cover 6 million fewer people and spend $289 billion less through 2020 if some states, as predicted, do not expand the safety net under the health reform law.

The law's other major source of insurance expansion—subsidized health plans sold through state exchanges—are projected add 3 million additional people compared with prior estimates, should some states opt out of expanding Medicaid. The growth will increase spending by $210 billion through 2020.

And 3 million more will be uninsured.

For safety net hospitals, the potential loss of newly insured patients could be particularly problematic. The health reform law will cut hospital subsidies to care for the uninsured by $36 billion over 10 years.

After factoring in another $5 billion in changes, the cost of the Patient Protection and Affordable Care Act through 2020 will drop by $84 billion if some states choose a more limited expansion or refuse to expand at all, as my colleague Rich Daly reported.

States have multiple and conflicting incentives as they consider Medicaid expansion, the CBO said. The agency's projections did not try to predict which state will do what, but instead sought to find a middle ground for “the many possible outcomes arising from the Supreme Court's decision.”

Federal spending will drop by an average of $6,000 for each person left uninsured who might have been eligible for Medicaid, the CBO said.

Spending will increase by $3,000 for each additional person covered by a subsidized plan within state exchanges.

As the CBO points out, and as we have previously reported, states that refuse to expand Medicaid will leave some low-income residents without any option of subsidized insurance. Subsidies are available to those with income between the poverty line and 400% of that threshold.

The CBO estimates that two-thirds of those left uninsured when states do not expand Medicaid will earn too little—less than the poverty line—to qualify for subsidies.

You can follow Melanie Evans on Twitter: @MHmevans.