• Wednesday, July 25, 2012RSS Feed

    CBO Updates Costs of ACA Insurance Coverage Provisions

    The insurance coverage provisions of the Affordable Care Act (ACA) will have a net cost of $1,168 billion over the 2012-2022 period—compared with $1,252 billion projected in March 2012 for that 11-year period—for a net reduction of $84 billion, the Congressional Budget Office (CBO) announced yesterday.

    The projected net savings to the federal government is a result from the Supreme Court's decision allowing states to choose whether or not to expand eligibility for coverage under their Medicaid programs. The reductions in spending from lower Medicaid enrollment are expected to more than offset the increase in costs from greater participation in the newly established exchanges. CBO and the Joint Committee on Taxation (JCT) now estimate that fewer people will be covered by the Medicaid program, more people will obtain health insurance through the newly established exchanges, and more people will be uninsured. The magnitude of those changes varies from year to year.

    In 2022, for example, Medicaid and the Children's Health Insurance Program (CHIP) are expected to cover about 6 million fewer people than previously estimated, about 3 million more people will be enrolled in exchanges, and about 3 million more people will be uninsured. These estimates are dominated by the movements of people losing eligibility for Medicaid. However, other smaller shifts in coverage also are expected to occur.

    Federal spending over the 2012-2022 period for Medicaid and CHIP now is projected to be $289 billion less than previously expected, whereas the estimated costs of tax credits and other subsidies for the purchase of health insurance through the exchanges (and related spending) have risen by $210 billion. Small changes in other components of the budget estimates account for the remaining $5 billion of the difference.

    The report issued yesterday does not include the budgetary impact of other provisions of the ACA.

    Additionally, CBO and JCT found that the latest repeal bill (HR 6079) would cause a net increase in federal budget deficits of $109 billion over the 2013-2022 period. Specifically, they estimate that HR 6079 would reduce direct spending by $890 billion and reduce revenues by $1 trillion between 2013 and 2022, adding $109 billion to federal budget deficits over that period.


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