Tuesday, January 29, 2013

Immigration reform could boost cost of Obamacare by hundreds of billions

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 It will be difficult for Republicans to back legislation as currently outlined – immigration reform could represent a massive expansion of Obamacare, potentially costing hundreds of billions of dollars over the next decade.
As the Washington Post’s Sarah Kliff details, legalizing immigrants who are currently in the country illegally could make millions of them eligible for Obamacare. Though the exact number is difficult to pin down for a number of reasons, and we don’t know how many immigrants would obtain legal status as a result of any reform package, one Congressional Budget Office report estimated that 7 million to 8 million illegal immigrants would be uninsured after Obamacare because they won’t qualify for benefits. If this population were legalized and became eligible, it would mean increasing the number of Obamacare beneficiaries by over 20 percent. (The CBO has estimated that Obamacare would cover 36 million people either through the Medicaid expansion or the exchanges.)
My very rough estimate based on existing CBO analysis is that an expansion of Obamacare on that scale could easily cost several hundred billion dollars over a decade – maybe more than a half trillion. The reason why it’s difficult to make a projection is that it’s hard to say who would qualify for Medicaid and who would qualify for subsidies. Also, given that the subsidies vary by income level, it’s hard to say (beyond educated guessing) where on the scale this newly eligible population would fall and thus how generous their subsidies would be. Also, it’s hard to say how many of them would have incomes low enough to qualify for existing Medicaid benefits anyway, which they would have been able to claim with or without Obamacare.