Health care law could reduce government costs

Buttons promoting Medicare for all ages are seen as nurses and physicians give free basic health screenings and call attention to what they say is the ongoing healthcare emergency despite the decision of the U.S. Supreme Court to uphold the Affordable Care Act, on July 10, 2012 in Los Angeles, Calif.

Stacey Vanek Smith: A report from the Congressional Budget office says President Obama's health care law could save the federal government $84 billion over the next decade. That savings is mostly because of the Supreme Court ruling last month, and a part of the law it ruled out.

Marketplace's Nancy Marshall-Genzer explains.


Nancy Marshall-Genzer: Last month, the Supreme Court ruled that states can refuse to expand their Medicaid rolls. The CBO says that means three million people will be shut out of Medicaid. That's where the savings comes from. But some of those people will end up buying subsidized insurance on the state health insurance exchanges the health care law establishes.

And that will be more expensive than Medicaid, according to Jonathan Gruber, a health economist at MIT who advised the Obama administration on health care reform.

Jonathan Gruber: Covering someone on Medicaid costs about two thirds as much as covering them in private health insurance, for two reasons. One is because Medicaid pays providers less; and the other is Medicaid has lower administrative costs.

The CBO yesterday didn't have an update on total deficit reductions from the health care law. But it did estimate that Republican legislation to repeal it would increase the deficit by $109 billion.

In Washington, I'm Nancy Marshall Genzer for Marketplace.

About the author

Nancy Marshall-Genzer is a senior reporter for Marketplace based in Washington, D.C. covering daily news.

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