On May 11, the Congressional Budget Office (CBO) released a report examining the impact of legislation (H.R. 1683) currently before the U.S. House Energy and Commerce Committee that would repeal the national health care reform law’s Medicaid maintenance of effort (MOE) requirement.  Under health reform, the federal government finances the initial cost of expanding Medicaid in 2014; however, states must maintain Medicaid eligibility levels until that expansion begins.  CBO estimates that eliminating the MOE requirement would reduce the federal deficit by $2.8 billion between 2012 and 2016 but result in 300,000 newly uninsured individuals.

From the report:

H.R. 1683 would repeal the maintenance of effort (MOE) requirements for Medicaid and the Children’s Health Insurance Program (CHIP) included in the American Recovery and Reinvestment Act of 2009 (ARRA) and the Patient Protection and Affordable Care Act (PPACA). The MOE provisions require, as a condition of receiving federal Medicaid and CHIP payments, that states maintain the eligibility standards, methodologies and procedures that were in place prior to the passage of PPACA and ARRA with respect to children and adults in Medicaid and CHIP.

CBO and the staff of the Joint Committee on Taxation (JCT) estimate that enacting the legislation would reduce deficits by approximately $2.8 billion over the 2012-2016 period and by about $2.1 billion over the 2012-2021 period. Those figures represent the net effect of changes in direct spending and revenue stemming from the effect of the bill on enrollment in Medicaid, CHIP, health insurance purchased through exchanges, and employer-based health insurance.

Full Report: Congressional Budget Office Cost Estimate: HR 1683 State Flexibility Act (PDF | 35 KB)

Congressional Budget Office. (2011). Cost Estimate: HR 1683 State Flexibility Act.