ObamaCare costs lower than expected, CBO says

 

ObamaCare's health insurance benefits will cost the federal government $104 billion less than previously expected over the next decade, the Congressional Budget Office (CBO) said Monday.

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The law's insurance coverage provisions are now projected to cost close to $1.4 trillion between 2015 and 2024, a decline of about $100 billion from previous estimates, the CBO found.

The benefits will cost taxpayers $36 billion this year, or $5 billion less than past projections. The coverage provisions include tax subsidies to help people purchase coverage on the health exchanges as well as the law's expansion of Medicaid.

The cost figures do not include the law's projected impact on the budget deficit.

The White House called the report evidence that the president's signature law "is working."

"This is historic progress and shows how the Affordable Care Act is working as it was supposed to, by helping more Americans get coverage while making historic progress in slowing health care cost growth and improving our nation's fiscal outlook by lowering deficits," White House press secretary Jay Carney said.

The CBO report found that health insurance subsidies would cost just over $1 trillion over the next decade — about $100 billion less than originally projected. The nonpartisan agency said the cost reductions came largely as a result of lower-than-expected premiums on the exchanges, as insurance companies tested  the waters with cheaper plans.

Carney called the report "welcome news" and said it demonstrated that the broader effort to constrain health care costs was "showing continued momentum."

The Affordable Care Act includes several major provisions that, if they remain in place, are expected to cancel out the law's overall cost and narrowly reduce the federal deficit.

The deficit reduction from the law could become more pronounced if the expected cost of the insurance coverage provisions continues to decline.

In total, 12 million additional people will have health insurance this year than otherwise would have without ObamaCare, according to the CBO.

The office did not raise its 2014 enrollment projection for the exchanges past 6 million, however. That number reflects the CBO's best guess at how many people will be enrolled in the exchanges over the course of 2014, on average.

It is difficult to compare this number to the administration's reported 7.5-million-and-counting enrollees.

First, the CBO only counts people as enrolled if they pay to activate their coverage, while the administration uses choosing a plan as its threshold for counting heads.

Second, the CBO number is a complex average over time, while the administration's is a snapshot of aggregate sign-ups.

The White House said the CBO's lower number merely reflected that those who purchased coverage toward the end of the enrollment period would only hold it for part of the year.

Individuals whose coverage started mid-way through the year were counted as a fraction of those who had purchased coverage for the full year, the White House said.

"CBO uses a technical average over-the-year estimate in which folks who came in late count for less than somebody who came in early for the purposes of calculating tax credits," Carney said.

Monday's report sheds light on the wide mix of healthcare factors that determine the cost of the law's most expensive programs.

Premiums came in lower than expected on the exchanges this year, for example, which decreased the cost of the average cost of an exchange subsidy by 6 percent, according to the CBO.

Budget analysts incorporated new data on labor force participation, wages and the overall non-elderly population.

These factors impact projections of how many people will be eligible for subsidized coverage, which affects the law's overall cost.

The report also provides a glimpse at how the Obama administration's delays and changes to the law's rollout will affect coverage and spending.

The administration’s partial deferral of the employer mandate will lower the number of people with employer-based health insurance and decrease the amount of penalty revenue collected by the government, CBO said.

The decision to allow some consumers to keep their old, non-compliant health plans will slightly reduce spending on exchange subsidies as people choose to stay outside the system, the report stated.

In total, 2 million people are expected to purchase plans this year that aren't compliant with the new ObamaCare rules, according to the CBO.

— This story was last updated 2:30 p.m.