Obamacare, the new health care law, will cost billions less than previously thought while at the same time providing health coverage to more people than in earlier projections, helping to bring down the federal budget deficit over the next decade, a Monday report from the nonpartisan Congressional Budget Office finds.
The CBO report also says that the annual increases in health insurance premiums on Obamacare health plans will be lower than expected. The lower premium costs — about 15 percent below what the CBO’s originally estimated — mean that the government will spend less to subsidize plans for people making under a certain income threshold, which is set at 400 percent of the federal poverty level.
Lowered Subsidies To Bring Down Obamacare Cost By $104 Billion
The CBO now estimates that Obamacare subsidy expenses will average about $300 per person in 2014, which is down about six percent from the CBO estimate of just two months ago. A decade from now, in 2024, the average subsidy will be $1,200 — 14 percent below previous estimates.
Lowered subsidy costs mean that the overall cost of the Obamacare program will be billions less than expected. Over the next 10 years, Obamacare will cost $104 billion below what the CBO previously estimated. At the same time more people will be covered by health insurance as a result of the law.
The percentage of the non-elderly population with health plans will rise to 84 percent this year from 80 percent and will be up to 89 percent by 2016, the report projects.
CBO Says Obamacare Will Lower Federal Deficit More Than Expected
In 2014 alone, the Obamacare will cost $5 billion less than previously projected, the CBO said in the new report.
“This report demonstrates the Affordable Care Act is working. It shows that marketplace healthcare costs have gone down because premium estimates have gone down,” said White House press spokesperson Jay Carney on Monday.
The federal budget deficit will run at $492 billion in 2014. That’s down by almost one third from 2013, with lowered health care expenditures contributing to that new, sunnier estimate.
The CBO report on the Affordable Care Act, aka Obamacare, came with the caveat that health care costs are difficult to predict, and could vary widely from region to region in the country. The CBO is basing its lowered cost projections in part on the prediction that enrollees will be healthier next year, but if that turns out the other way around, the whole financial outlook for Obamacare could change. But the CBO added that so far, there has been no indication that the overall health of Americans on Obamacare plans is about to take a sudden turn for the worse.
“Anecdotal reports to date have been mixed and provide no clear evidence that insurers have been substantially surprised by the health status of their enrollees,” the report says.
Premiums Will Rise At Lower Rate Than Earlier Estimates, Says CBO
While some dire forecasts from health insurance companies and political opponents of Obamacare called for double-digit premium increases from year to year, the CBO estimated only a small increase from 2014 to 2015 — only $100 in the cost of a “silver” plan, which the study used as its benchmark.
Starting in 2016, Obamacare plan premiums will rise about six percent per year, according to the CBO study.
America will still have about 31 million uninsured people by 2024, the CBO said. But that figure — which includes people who don’t buy insurance despite the penalty, illegal immigrants, and low income people who don’t qualify for Medicaid in states where the program was not expanded — is 26 million fewer than if Obamacare had never been passed.