The Affordable Care Act’s coverage provisions are now estimated to cost the government 20% less than originally estimated for the five-year period ending 2019, according to updated analysis from the Congressional Budget Office and Joint Committee on Taxation. The costs primarily come from spending for subsidies that are provided through the exchanges and an increase in spending for Medicaid.
The groups now estimate that the ACA’s coverage provisions will result in net costs to the federal government of $76 billion in 2015 and $1,350 billion over the period from 2016 to 2025.
Compared with the office’s estimate in April 2014, which spanned the 2015-2024 period, the new numbers are $101 billion, or about 7%, lower.
Looking at the projections made by the office in March 2010 -- just before enactment of the ACA -- the numbers are revised down $139 billion or about 20% through 2019, the last year of the 10-year budget window used in that original estimate.
The revised estimates are in large part a reflection of Washington’s “official budget scorekeeper catching up with reality,” says Larry Levitt, senior vice president of the Henry J. Kaiser Family Foundation.
“Enrollment is ramping up more slowly than CBO originally anticipated and premiums are coming in lower than expected,” Levitt, co-executive director of Kaiser’s program for the study of health reform and private insurance, says. “Looking at the big picture, implementation of the ACA is playing out pretty much how CBO saw it when the law first passed, with the obvious exception that the Supreme Court subsequently made the expansion of Medicaid voluntary for states.”
Katherine Hempstead, a director at the Robert Wood Johnson Foundation, agrees. The downward adjustments, she says, “are based in part on a pair of observations that are very telling: both premium growth and exchange enrollment are a little below expectations.”
“Since we know that affordability is the main barrier cited by those who are eligible but uninsured, those two adjustments really reveal a continuing challenge to bring in those at the bottom of the income distribution with a product that is affordable, even when health care costs are rising more slowly than many expected,” she explains.
The CBO and JCT estimates, compiled in December 2014, and released Monday, do not reflect CBO’s updated economic projections, which were completed after the agency’s analysis of insurance coverage was under way, the most recent data on enrollment through insurance exchanges, or any federal administrative actions or decisions by states about expanding Medicaid coverage that have occurred since that time.
The Supreme Court is expected to rule this summer on whether the federal government can provide subsidies on the federal health care exchange, which makes up a majority of the estimated costs.
Uninsured rate falls
CBO says that in 2014, 42 million non-elderly Americans were uninsured, which is 12 million fewer than would have been uninsured in the absence of the ACA.
In 2015, the office estimates 36 million non-elderly people will be uninsured and from 2016 through 2025, the number of uninsured is expected to decrease to between 29 million and 31 million, or 24 million to 27 million fewer than would have been uninsured in the law’s absence.
For 2025, the 31 million people projected to be uninsured represent one-in-nine residents under age 65, with 30% of them believed to be unauthorized immigrants not eligible for exchange subsides or most Medicaid benefits.
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