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Letter to the Honorable Judd Gregg 1 (July 2009)

handle is hein.congrec/cbo9369 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE Douglas W. Elmendorf, Director U.S. Congress Washington, DC 20515 July 7, 2009 Honorable Judd Gregg Ranking Member Committee on the Budget United States Senate Washington, DC 20510 Dear Senator: In response to your request, the Congressional Budget Office (CBO) has considered the likely effects on federal spending and health insurance coverage of adding a substantial expansion of eligibility for Medicaid to the Affordable Health Choices Act, a draft of which was recently released by the Senate Committee on Health, Education, Labor, and Pensions (HELP). CBO's preliminary analysis of that draft legislation was provided to Senator Edward M. Kennedy on July 2, 2009; that analysis is available on CBO's web site, www.cbo.gov. The draft legislation would make a number of changes regarding the financing and provision of health insurance, including establishing insurance exchanges through which coverage could be purchased and providing new federal subsidies to help individuals and families with income between 150 percent and 400 percent of the federal poverty level (FPL) pay for that coverage. Although the draft legislation envisions that Medicaid would be expanded to cover individuals and families with income below 150 percent of the FPL, it does not include provisions to accomplish that goal, and our preliminary analysis (conducted jointly with the staff of the Joint Committee on Taxation) did not reflect such an expansion. The precise effects on federal costs and insurance coverage of adding an expansion of eligibility for Medicaid up to 150 percent of the FPL would depend importantly on the specific features of that expansion. For example, the effects would depend on how eligibility for the program was determined and on whether the expansion started immediately or only as the proposed insurance exchanges went into operation. The effects would also depend what share of the costs for newly eligible people was borne by the federal government and what share was borne by the states (which would be determined by the average FMAP, or Federal Medical Assistance Percentage). In addition, the effects would depend on whether states faced a maintenance-of-effort requirement regarding their current Medicaid programs. www.cbo.gov

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