Longer-Term Effects of the Better Care Reconciliation Act of 2017 on Medicaid Spending
Medicaid spending under the Better Care Reconciliation Act of 2017 would be about 35 percent lower in 2036 compared with CBO’s extended baseline. Such spending under the bill would increase each year throughout the next two decades.
In CBO’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 below). 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. For consistency, this longer-term analysis uses CBO’s extended baseline published in July 2016. CBO analyzed these longer-term effects at the request of the Ranking Members of the Senate Budget Committee and the Senate Finance Committee.