Report: Health law's costs continuing to grow

The most expensive part of President Obama's healthcare reform law keeps getting more expensive.

The cost of providing subsidies to help people buy insurance could continue to rise, straining the federal budget more than expected, the conservative American Action Forum said in a paper published Monday.

The think tank, led by former Congressional Budget Office director Douglas Holtz-Eakin, compared CBO's initial estimates for the Affordable Care Act to CBO's most recent analysis, issued this summer after the Supreme Court upheld the law.

The estimated cost of insurance subsidies has risen nearly 25 percent since the law was passed, according to the AAF analysis.

"The lesson is clear: in its brief existence, the ACA entitlement has already increased in cost by nearly 25 percent," the paper states. "Given the continued rise in health care costs in the United States, the stagnation of incomes during the post-2009 recovery, and the large upside risk due to employers no longer providing insurance, there is substantial reason to suspect that the price tag could rise much further yet."

After the ACA passed, CBO estimated the federal government would pay a total of roughly $462 billion in subsidies by 2019. In the post-Supreme Court estimate, that total had risen to $574 billion, according to the AAF paper.

Expected costs also rose in each individual year — CBO has upped its estimate for 2018, for example, from $106 billion to $129 billion.

Some of the increase is a result of the Supreme Court's ruling: the court said states have the ability to opt out of the healthcare law's Medicaid expansion. As Republican-led states take advantage of that option, more Medicaid-eligible people will end up in the exchanges, getting subsidies from the federal government.

Although the subsidies are a large new area of federal spending, CBO has said the healthcare law, taken as a whole, reduces the federal deficit.

Subsidies will begin to flow in 2014, when new insurance markets known as exchanges are supposed to be up and running in each state. Exchanges will primarily serve people who don't get coverage through an employer, and people with incomes between 100 percent and 400 percent of the poverty level will get subsidies to help pay for their coverage.

The subsidies are tied to family income so that poorer families get more help. They're also pegged to the cost of a healthcare plan, rather than a fixed amount of money — meaning the cost of subsidies will go up as healthcare costs continue to rise.

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