CBO’s Updated Projections Indicate ACA Coverage Provisions Will Cost Less, But Fewer Will Be Insured
Featured content from: American Health Lawyers Association
Published on: March 16, 2012
The Congressional Budget Office (CBO) issued March 13 updated projections on the insurance coverage provisions of the Affordable Care Act (ACA), which indicate lower net costs over the next decade but a reduction in the number of people who will gain health insurance under the law than previous estimates.
CBO, which issued the updated projections with the staff of the Joint Committee on Taxation, now pegs the net cost of the ACA insurance coverage provisions at $ 1.083 trillion over the 2012-2022 period, which is $50 billion than March 2011 projections of $1.31 billion.
At the same time, the new projections expect about 2 million fewer people to gain coverage as a result of the ACA. CBO now estimates the ACA will reduce the number of uninsured by 30 million to 33 million in 2016 and subsequent years, leaving 26 million to 27 million uninsured.
The new projections estimate between 20 million and 23 million people will receive coverage through the exchanges, and 16 million to 17 million will be enrolled in Medicaid and CHIP.
CBO also predicts fewer people will obtain health insurance coverage from their employer or through the new insurance exchanges than previously thought, while more are expected to obtain coverage from Medicaid, the Children’s Health Insurance Program (CHIP), or from nongroup or other sources.
According to the new estimates, gross costs of the ACA coverage provisions are actually about $50 billion higher than last year’s projection—$1.496 trillion through 2021, but other budgetary effects offset this increase.
Net costs, CBO says, were boosted by an additional $168 billion in estimated costs for Medicaid and CHIP and $8 billion less in estimated revenues from the excise tax on high-premium health insurance plans.
“[T]hose increases were more than offset,” however, “by a reduction of $97 billion in the projected costs for the tax credits and other subsidies for health insurance provided through the exchanges and related spending, a reduction of $20 billion in the projected costs for the tax credits for small employers, and a reduction of $107 billion in deficits from the projected revenue effects of changes in taxable compensation and penalty payments and from other small changes in estimated spending,” CBO said.
CBO notes its estimates do not include federal administrative costs or the effects of spending reductions in Medicare and additional tax revenue that was included in the ACA to pay for the insurance coverage provisions.
CBO cites a number of factors for the changes in its most recent estimates over last year’s figures, including recently enacted legislation that reduced the costs of the ACA’s coverage provisions by about $38 billion; changes in the economic outlook; and other technical changes.
CBO also issued March 13 updated budget projections for fiscal years 2012-2022.