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May 14 (Bloomberg) -- Two million fewer people than previously estimated will gain health coverage under the U.S. Affordable Care Act as new rules allow some uninsured Americans to avoid a mandate for participation, the Congressional Budget Office said.

About 25 million uninsured people are expected to gain coverage through use of subsidized health plans or an expansion of Medicaid, down from a 27 million estimate made in February, the budget office said today in a report. Proposed regulations from the Treasury and Health and Human Services departments would let as many as 1 million more people escape penalties for going without insurance, the budget office said.

The CBO’s estimate of the number of people who will gain coverage has slid from a high of 34 million in 2011, a year after the law was passed. Key in the erosion was the Supreme Court’s ruling in June that states don’t have to participate in the expansion of Medicaid, the state-federal plan for the poor.

The Obama administration, in response, issued regulations that “expanded the number of people who will be exempt from paying a penalty for being uninsured relative to our previous expectations,” CBO analysts wrote.

Twenty states are so far opposing the expansion, according to the Kaiser Family Foundation, a nonprofit health research group based in Menlo Park, California. The Obama administration said in January it wouldn’t penalize people living in those states for not carrying health insurance if they would have been eligible for an expanded Medicaid as envisioned by the health law.

The estimated cost of implementing the law through 2023 rose by about $40 billion to $1.36 trillion, the budget office said.

To contact the reporter on this story: Alex Wayne in Washington at

To contact the editor responsible for this story: Romaine Bostick at

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