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CBO cuts Medicaid cost estimates; GOP governors unlikely to care

By Virgil Dickson
Posted: April 24, 2014 - 1:45 pm ET

States will spend $46 billion between 2015 and 2024 on Medicaid and Children's Health Insurance Programs because of the Patient Protection and Affordable Care Act, the Congressional Budget Office now estimates. The new figure is approximately one-third less than its $70 billion February estimate. The CBO did not provide an explanation for the new estimate Thursday morning.

Regardless of how the federal agency arrived at the new figure, however, it is unlikely to sway anti-Obamacare Republican governors toward expanding Medicaid offerings in their states, political pundits said. The politics of Obamacare will trump any discussion of lower cost estimates.

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“I suspect most states debating whether or not to expand Medicaid will look to their own historic cost structure more than CBO figures of aggregate Medicaid spending,” said Devon Herrick, senior fellow at the National Center for Policy Analysis.

Any speculation that the reduced estimate will change anyone's mind is overlooking why some state officials have been so vehement about not expanding their Medicaid programs, noted Yevgeniy Feyman, a fellow at the Manhattan Institute, a conservative think tank.

“The concern of many governors and legislatures is that any avoidable increase in Medicaid spending should be avoided,” Feyman said. “The reason is pretty simple—it's become one of the biggest budget items for most states around the country.”

Feyman questioned the reliability of the new estimate, given that the CBO offered no explanation for it. Additionally, converting hold-out states will require the Obama administration to signal that it would be open to broader changes in the Medicaid program, Feyman said.

Some observers are more optimistic, however. “Fiscal concerns about the Medicaid expansion have been repeatedly cited by a number of governors as to why they are opposed to Medicaid expansion, and the new CBO estimates are yet more evidence refuting those arguments,” said Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities, a liberal think tank.

Currently, 24 states have not expanded Medicaid eligibility.

Follow Virgil Dickson on Twitter: @MHvdickson

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