Click to access 52859-medicaid.pdf

In the Congressional Budget Office’s assessment,
Medicaid spending under the Better Care Reconciliation
Act of 2017 would be 26 percent lower in 2026
than it would be under the agency’s extended baseline,
and the gap would widen to about 35 percent in 2036
(see Figure 1). Under CBO’s extended baseline, overall
Medicaid spending would grow 5.1 percent per year
during the next two decades, in part because prices for
medical services would increase. Under this legislation,
such spending would increase at a rate of 1.9 percent per
year through 2026 and about 3.5 percent per year in the
decade after that.

CBO and the staff of the Joint Committee on Taxation
do not have an insurance coverage baseline beyond the
coming decade and therefore are not able to quantify the
legislation’s effect on insurance coverage over the longer
term. However, the agencies expect that after 2026,
enrollment in Medicaid would continue to fall relative to
what would happen under the extended baseline.
On the basis of consultation with the budget committees,
CBO’s just-released cost estimate for the bill measured

the costs and savings relative to CBO’s March
2016 baseline projections, with adjustments for legislation
that was enacted after that baseline was produced.1
For consistency, this longer-term analysis uses CBO’s
extended baseline published in July 2016.2
CBO analyzed these longer-term effects at the request of the
Ranking Members of the Senate Budget Committee and
the Senate Finance Committee.

Effects on Spending

Over the next decade, CBO projects, a large gap would
grow between Medicaid spending under current law and
under this bill. In later years, that gap would continue to
widen because of the compounding effect of the differences
in spending growth rates. CBO projects that the
growth rate of Medicaid under current law would exceed
the growth rate of the per capita caps for all groups covered
by the caps starting in 2025.

In CBO’s extended baseline, Medicaid spending is projected
to be 2.0 percent of GDP in 2017 and 2.4 percent
by 2036. The 35 percent reduction in that spending that
CBO estimates for 2036 under this legislation would
result in Medicaid spending of 1.6 percent of GDP.

Under this legislation, after the next decade, states
would continue to need to arrive at more efficient
methods for delivering services (to the extent feasible)
and to decide whether to commit more of their
own resources, cut payments to health care providers
and health plans, eliminate optional services, restrict
eligibility for enrollment, or adopt some combination
of those approaches. Over the long term, there would
be increasing pressure on more states to use all of those
tools to a greater extent.