CBO Lowers Cost Projection for ACA Over Next 10 Years by 11%

The federal government will spend 11% less on the Affordable Care Act over the next decade than previously anticipated, according to updated figures released Monday by the Congressional Budget Office, the Washington Post‘s “Wonkblog” reports.

Overall, the ACA is expected to cost $1.2 trillion over the next 10 years. By comparison, CBO in March 2010 estimated the ACA would cost $710 billion from 2015 to 2019. However, CBO now estimates that the law will cost about $506 billion, or about 29% less, during that time period (Ehrenfreund, “Wonkblog,” Washington Post, 3/9).

According to CBO, the decline in the estimated cost is the result of fewer people enrolling in exchange coverage than the office had anticipated, as well as a slowdown in health care spending growth (Ferris, The Hill, 3/9). In addition, fewer individuals signed up for Medicaid coverage and more individuals were enrolled in employer-sponsored health plans and private coverage than had been expected (“Wonkblog,” Washington Post, 3/9).

According to the data, subsidies to help U.S. residents purchase coverage through the exchanges totaled $15 billion in 2014. That figure is expected to grow to $41 billion in 2015 and $107 billion in 2025, according to CBO (The Hill, 3/9).

CBO said that about eight million of the 11 million individuals enrolled in exchange coverage will receive subsidy payments averaging $3,960 in 2015. By 2020, about 17 million of the 23 million U.S. residents expected to be enrolled in exchange coverage will receive annual subsidy payments of $5,070 on average (Dinan, Washington Times, 3/9).

Lower-Than-Expected Enrollment

CBO also noted that it anticipates about one million fewer U.S. residents will gain coverage under the ACA than previously projected, with about 24 million previously uninsured individuals expected to gain health plans (The Hill, 3/9). Still, CBO estimated that the ACA would help to insure 91% of U.S. residents at its peak over the next decade (Washington Times, 3/9).

Further, CBO officials estimated an $8 billion increase in Medicaid spending over the next two years because of unanticipated higher federal spending on the program during the first four months of 2015. Overall, the federal government’s total spending on Medicaid and Medicare is expected to increase to $1.1 trillion and $576 billion annually, respectively, by 2025 (The Hill, 3/9). Still, because of  a lower-than-expected number of individuals who will be enrolled in Medicaid, CBO predicted that the program would cost $73 billion less than previously anticipated from 2016 to 2024 (Kliff/Klein, Vox, 3/9).

Source: California Healthline