CBO Lowers Projected Obamacare Costs by $104 Billion
The Congressional Budget Office released a report Monday morning revising down the cost estimate of the Affordable Care Act to the federal budget by $104 billion over the next decade, and raising the amount of people expected to be insured by the law by 1 million.
“Relative to their previous projections made in February 2014, CBO and JCT now estimate that the ACA’s coverage provisions will result in lower net costs to the federal government,” the office wrote in a release. “The agencies currently project a net cost of $36 billion for 2014, $5 billion less than the previous projection for the year; and $1,383 billion for the 2015–2024 period, $104 billion less than the previous projections.” You look at chart now:
Much of the savings come from lower-than-expected average premiums. The CBO reported the average cost of the plan is now projected to be about 15% lower than the organization’s initial 2009 projection, lowering total government subsidies by $186 billion. The slowing in the rise of health care costs, a trend partially (though by no means overwhelmingly) attributable to provisions of the ACA, also helped to lower costs.
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The CBO does not sound particularly worried about the initial risk pools’ effects on premiums: “Anecdotal reports to date have been mixed and provide no clear evidence that insurers have been substantially surprised by the health status of their enrollees,” the CBO wrote. The office added that it expects the second crop of enrollees in 2015 to be healthier than this mix, further reducing premiums at the outset, though it expected that trend to flatten after 2016.
The CBO also increased its projection of the total amount of people covered under the ACA by 2024 from 25 million to 26 million, and noted that the percentage of non-elderly adults with insurance was expected to rise from 80% to 84% in 2014 — a number in line with Gallup’s and RAND’s polling — and should increase to 89% in 2016.
Read the full report HERE.
[Image via Shutterstock]
