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One More Time: CBO Thinks Obamacare *Reduces* Deficit

The Congressional Budget Office just published a newly updated estimate of the Affordable Care Act and its impact on the budget. The estimate largely tells us what we already knew: The law, when fully implemented, will dramatically reduce the number of Americans without health insurance. It will also reduce the deficit.

This last part remains a big deal, if only because so many conservatives—and, yes, so many members of the public—refuse to believe it. Over and over again, you hear people saying that Obamacare will run up the deficit. The CBO, which is our most reliable guide on such matters, begs to differ. 

CBO can't be certain, because nobody can be certain, how exactly the law will play out. But the best available evidence suggests that, in the end, the law will leave the federal treasury with more money than it would have otherwise. And that's just in the short- to medium-term. If the program's efforts at re-engineering the health care system really work, then all spending on health care—from the federal government, corporations, and individuals alike—will stop rising so quickly, freeing up more money for other purposes (like, for example, raises to employees).

But this latest CBO estimate comes with an asterisk previous ones lacked. Thanks to the Supreme Court, states are more likely to opt out of the law's expansion of Medicaid. The non-participation of some states won't worsen the budget picture: If anything, the federal deficit should come down even more if some states keep their Medicaid programs as they exist today, with more limited enrollment. But if states don't participate int he expansion, more Americans will end without health insurance.

The net difference won't be staggering, according to CBO. The agency estimates the result will be 30 million additional people with health insurance, rather than 33 million people, by 2022. Partly that's because, in states that don't expand Medicaid, some low-income residents will be able to get subsidized, regulated private insurance through the new exchanges.

From the looks of things—and, as always, I may be missing something—CBO's estimate here looks more of a guess than some of its other estimates: There isn't a consistent set of hard data on which the agency could base a projection of how many states will opt in or out of the expansion. But that's not so important. What matters isn't the precise number but what it, and the rest of the report, tells us: Obamacare can help a great many people, while improving the short- and long-term budget oulook. But its success will depend, at least partly, on the willingness of states to go along. And although they should, if only for pure self-interest, that doesn't mean that they will.

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