CBO: Obamacare Costs Dropping

Lower enrollment because of the HealthCare.gov rollout will save the government money.

WASHINGTON, DC - OCTOBER 30: Health and Human Services Secretary Kathleen Sebelius testifies before the House Energy and Commerce Committee about the troubled launch of the Healthcare.gov website October 30, 2013 in Washington, DC. The federal healthcare insurance exchange site has been plagued by problems since its launch on October 1. 
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Clara Ritger
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Clara Ritger
March 5, 2014, 1:32 p.m.

Obama­care’s most ex­pens­ive pro­vi­sions will cost about $9 bil­lion less than ex­pec­ted, ac­cord­ing to the latest es­tim­ates from the Con­gres­sion­al Budget Of­fice.

CBO said the law’s cov­er­age pro­vi­sions — a set of policies that in­cludes the law’s in­sur­ance sub­sidies and Medi­caid ex­pan­sion — will cost the fed­er­al gov­ern­ment about $1.5 tril­lion over the next dec­ade.

The latest ana­lys­is doesn’t cov­er the whole law, and CBO re­it­er­ated that it ex­pects the law to re­duce the fed­er­al de­fi­cit. Tues­day’s ana­lys­is was con­fined to the law’s cov­er­age pro­vi­sions, and didn’t in­clude Medi­care sav­ings or new taxes on drug and med­ic­al-device com­pan­ies, which off­set the costs of ex­pand­ing cov­er­age.

The $1.5 tril­lion spend­ing es­tim­ate is about $9 bil­lion lower than es­tim­ates from last year, due in part to CBO’s es­tim­ate that roughly 1 mil­lion few­er people will ob­tain health in­sur­ance on the ex­changes and 1 mil­lion few­er people will sign up for Medi­caid and the Chil­dren’s Health In­sur­ance Plan, due to the rocky rol­lout of Health­Care.gov.

Among CBO’s oth­er jus­ti­fic­a­tions for lower­ing the cost are that in­sur­ance com­pan­ies priced ex­change premi­ums lower than the agency had an­ti­cip­ated, and that the agency now ex­pects to re­ceive more from in­sur­ance com­pan­ies than it will pay out in a pro­gram de­signed to pro­tect in­surers who get a par­tic­u­larly un­healthy—and ex­pens­ive—mix of en­rollees.

CBO es­tim­ates that 24-25 mil­lion Amer­ic­ans will get health in­sur­ance through the Af­ford­able Care Act’s ex­changes and 12-13 mil­lion Amer­ic­ans will gain Medi­caid or CHIP cov­er­age. But some Amer­ic­ans—roughly 6-7 mil­lion—will lose their em­ploy­er sponsored cov­er­age, ac­cord­ing to the pro­jec­tions, as some em­ploy­ers and em­ploy­ees choose in­stead to seek health in­sur­ance on the ex­changes.

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