Health Insurance: Obamacare Costs Lower Than ExpectedBy: Sean Patterson - April 14, 2014
One of the largest criticisms of the Affordable Care Act (ACA, also known as “Obamacare“) is that the program is simply too expensive. Lawmakers opposed to the ACA have continually called the program an expensive waste and even shut down the U.S. government in protest over the ACA’s rollout. Now it appears that ACA proponents have some ammunition to use against these arguments.
The Congressional Budget Office (CBO) today released a new report estimating the costs that the Affordable Care Act’s insurance coverage provisions will bring to the U.S. government. These new numbers are substantially lower than previous estimates of the program’s cost.
The report shows that the insurance coverage mandates brought about by the ACA will cost the U.S. $36 billion during 2014 – $5 billion less than projections made back in February. For the years 2015 to 2024 the program is expected to cost $1,383 billion, $104 billion less than previous estimates.
Gross subsidies, costs for the exchanges, increased Medicaid spending, and increased Children’s Health Insurance Program (CHIP) spending are now expected to total $1.8 billion from the years 2015 to 2024. This will be offset slightly by an estimated $456 billion in revenue obtained through the program, mostly penalty payments made by employers and individuals as well as excise taxes on high-premium health plans.
Today’s new report shows that the costs of subsidies for insurance exchanges will be significantly lower than previously expected. It also, however, shows that the revenue expected to come from employer and individual penalty payments will also be lower than previously estimated.
According to the CBO the costs of the ACA’s insurance coverage provisions come almost entirely from insurance exchange subsidies and an increase in Medicaid spending. In addition to the costs associated with the insurance coverage portion of the ACA, the law’s other provisions are expected to actually save the U.S. money. The CBO estimates that a total cost analysis of all the ACA’s effects will, overall, reduce federal deficits.
Image via the White House