The Build Back Better Act includes provisions that would result in new federal spending for home- and community-based services (HCBS) provided by Medicaid. Those provisions would affect states, caregivers, and people who use HCBS.
Summary
H.R. 5376, the Build Back Better Act, as passed by the House of Representatives, includes several provisions that would result in new federal spending for home- and community-based services (HCBS) provided through Medicaid. Those provisions would increase federal deficits by $150 billion from 2022 to 2031, the Congressional Budget Office estimates.
In addition to the effect on the federal budget, those provisions would affect states, caregivers, and people who use HCBS. This document describes the key channels through which those changes could affect the economy—answering some questions asked by Members of Congress. Understanding those channels would be important for identifying any potential effects on the agency’s economic forecast if such policies were enacted. The document also describes channels through which such policies could continue to affect the labor market in the longer run.
If those policies were enacted, the number of workers providing those services would grow, and their earnings would increase. Some people who are currently providing HCBS to family members would be paid for that work, and some would return to their primary occupations. In anticipation of lower costs for such services in the future, some people might save less today.
This document does not examine economic effects that would arise from how the additional spending was financed.