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More Good News For Obamacare: It’s Going To Cost Less Than We Thought

health care costs

The Affordable Care Act (ACA) will cost about 20 percent less over the next decade than originally projected, the nonpartisan Congressional Budget Office (CBO) reported Monday, in part because lower-than-expected healthcare inflation has led to smaller premiums.

The ACA’s insurance provisions — such as the Medicaid expansion and the distribution of tax credits to help people pay for plans — are now expected to cost the the federal government about $76 billion in 2015 and $1.35 trillion from 2016 through 2025, the CBO said in its latest report.

Just last April, the CBO had predicted these Obamacare provisions would cost about $101 billion more over 10 years. And in March 2010, just before the law was passed, the CBO estimated these elements of Obamacare would add up to $139 billion more (or 20 percent more) for the five-year period ending in 2019.

There are various reasons for the adjusted prediction. For instance, average enrollment in the new ACA marketplaces was slower than anticipated in 2014, enrollment in the “bronze” plans (one of the cheapest options available on the marketplaces) was higher than expected in 2014, and the proportion of newly-eligible Medicaid enrollees was higher than anticipated. Some of the lower costs are the result of a general slowdown in healthcare expenses, which has been reported by private insurers as well as Medicare and Medicaid officials, the CBO wrote.

Consequently, the CBO reduced its 10-year cost estimate for the ACA by $101 billion by making the following changes: It’s predicting the government will spend $68 billion less on Obamacare subsidies, spend $59 billion more on Medicaid, and bring in $97 billion more in revenues from projected changes in employer-based coverage. Additionally, the CBO is projecting the government will spend $5 billion more due to changes in estimated penalty payments and certain taxes collected.

The CBO’s most recent coverage estimates project that an average of 12 million people will be enrolled in Obamacare in 2015, down from an earlier projection of 13 million but far higher than the administration’s target of enrolling 9 million people this year. There are still an estimated 36 million non-elderly people in the United States who are projected to go without insurance this year — but that’s 19 million fewer than would have been uninsured in the absence of Obamacare.

The report also offers a glimpse at the long-term changes in the insurance industry likely to result from the Affordable Care Act over the next decade. In all, the CBO predicts that 27 million people will gain coverage under the healthcare law over the next decade. That includes as many as 16 million people gaining coverage through the government-run programs Medicaid and the Children’s Health Insurance Program (CHIP), as well as a loss of 10 million people with employer-based coverage.

Overall, the budget office projects that insuring people under Obamacare will cost roughly $1.35 trillion over the next decade. Most of that money goes to subsidizing the cost of insurance for working-class and middle-class families and to the expanded Medicaid program. The report also suggests that projected price tag could drop again later this year. An estimate of future premiums, currently in its “early stages,” seems to suggest lower costs, the report said.

So (millions) more people have health insurance than would have without Obamacare, resulting in significant financial benefits for everyday Americans. And the costs of Obamacare are less than projected when the ACA was signed into law. And yet, Republicans would still like to tear it all down…

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"Science is a way of thinking much more than it is a body of knowledge." -- Carl Sagan


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