Health Care

CBO: ObamaCare subsidies to cost 11 percent less

The federal government will spend 11 percent less than expected on ObamaCare subsidies over the next decade, according to new figures from the Congressional Budget Office (CBO).

The drop in federal spending is the result of lower-than-expected enrollment figures as well as a slower-than-expected rise in healthcare spending, the office said. 

CBO officials also predicted an $8 billion rise in spending on Medicaid, the low-income insurance program, over the next two years, due to unexpectedly high federal spending in the first four months of 2015. Millions of people gained Medicaid coverage under ObamaCare, which encouraged states to expand the program.

The Obama administration has attributed much of the slowdown in new enrollment figures to the new piecemeal approach to Medicaid expansion after the Supreme Court courted in 2012 that states had to opt in to sign more people up for the program.

Officials have also pointed to uncertainty about the fate of employer-sponsored and individually purchased insurance plans in the new marketplaces.

Subsidies were first doled out in 2014, costing a total of $15 billion. That cost is expected to rise to $41 billion in 2015, when more people receive subsidies, and eventually rise to $107 billion in 2025. 

The subsidies are now expected to cost $1.3 trillion. With the smaller price tag for subsidies, the CBO now expects a major decrease in the federal deficit to the tune of $431 billion over 10 years.

The cost of subsidies is far dwarfed by overall spending on Medicare, the healthcare program for seniors, and Medicaid. The two programs cost a combined nearly $1 billion in 2014.

The spending on Medicare and Medicaid is expected to balloon to 1.1 trillion and $576 billion per year, respectively, within 10 years.


The office also expects that about 1 million fewer people are expected to gain healthcare under ObamaCare. It now expects 24 million previously uninsured people to gain coverage.

The budget office had last released ObamaCare projections in January, when it projected a 20 percent decrease in total spending of the law’s insurance programs.



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