CBO: Thanks to Lower Premiums, Obamacare Won’t Blow Up the Deficit
An updated estimate of the effects that the insurance coverage provisions of the Affordable Care Act will have on the United States budget provided by the Congressional Budget Office may not have declared the health care reform a success, but it shows that the law is not the fiscal disaster some opponents believed it would be.
In the months that the Affordable Care Act was debated in Congress before President Barack Obama signed his signature piece of legislation into law in March 2010 and in the the years the Affordable Care Act was debated across the country before the cornerstone provision of the health care reform was implemented in October 2013, the overarching concerned voiced by critics was its cost. In a document entitled “The Case Against Obamacare,” posted to the GOP website in 2011, claimed that the health care reform and its so-called “unconstitutional” individual insurance mandate would drive up health care costs, increase insurance premiums, hurt the quality of health care, raise taxes, and swell the deficit.
The cornerstone provision of the Affordable Care Act — the individual insurance exchanges set up in all fifty states and Washington D.C. — launched on October 1, and despite the design flaws and software errors that marked the rollout and kept sign-ups low initially, more than 7 million Americans had enrolled by the March 31 deadline, meeting the high-end of the Obama administration’s target. The exchanges system may be in operation and the 7 million enrollment hit, a sign that the exchanges are viable, but it is far too soon for health industry experts to conduct a full analysis of how Obamacare has altered the American health care system. However, evidence is emerging that can provide clues on how health care costs, insurance premiums, taxes, and the deficit have been affected.
A Monday report from the nonpartisan Congressional Budget Office contained an updated estimate on how the Affordable Care Act will impacted the United States budget and the health insurance industry. The exchange program intended to expand insurance coverage will cost the government $104 billion less over the next decade than originally projected, and in 2014 alone, the coverage provisions will cost $5 billion less than the $41 billion calculated earlier in the year. The federal government will spend a total of $1,839 billion on subsidies for insurance obtained through the exchanges, on Medicaid payments, on the Children’s Health Insurance Program known as CHIP, and on tax credits for small employers. That figure will be partially offset by penalties collected from those Americans who choose to violate the individual insurance mandate. Plus, the CBO estimated that Medicare outlays will decrease by $98 million over ten years, compared with the February estimate, thanks to lower prescription drug and hospital insurance expenditures, while Medicaid spending would decrease by $29 billion.