Estimating Obamacare costs becoming ‘more challenging': CBO
“Because of the complexities of implementing a repeal of ACA, the budgetary effects of repealing the act would not simply be the opposite of the estimates of the budgetary effects of enacting the ACA that are presented [in the report],” the CBO wrote.
Over the 2016-26 time period, the law is expected to cost $136 billion more than when the estimates were run last year, according to the CBO report released March 24. Insurance subsidies, it said, will add just over $600 billion total to the federal deficit over the next decade.
Six million fewer people are expected to enroll through the insurance marketplace for 2016 than it had forecast last year. The CBO attributes this drop, in part, to a delay in ACA rules that would have forced higher costs onto some businesses, resulting in more small employers keeping their in-house insurance plans for the short term.
The CBO estimates that by 2019, roughly nine million people currently covered by their employers will no longer receive such coverage.
Molly Day, spokesperson for the National Small Business Association (NSBA), told AMI Newswire this reflects the trend her organization has seen with smaller businesses. As the costs and demands of complying with ACA have grown, small business have elected to either drop coverage or avoid expanding.
“What we’re seeing that’s concerning is that a lot of people are intentionally not growing … because of the Affordable Care Act,” Day said. “It’s really hard for a small business to stay stagnant and continue to be successful.”
Day points to a survey done by NSBA last year that showed many small businesses were trying to stay under the threshold of 50 employees that triggers mandatory coverage under ACA. Even small businesses that drop the coverage, she said, will be hit as formerly tax-deductable health insurance expenses will now be taxable, even if the employers offer increased pay to compensate.
“When the bill was passed … there was not enough market reforms to make health insurance affordable,” Day said. “It’s unfortunate we’re at this place now.”
In its report, the CBO notes that it expects increased revenue from the money that moves out of tax-deductible health plans and into taxable accounts.
CBO estimates 17 million people who would have been uninsured will receive some form of subsidized insurance in 2016, which is lower than estimates of 20 million such subscribers released earlier by the Department of Health and Human Services. CBO attributes the discrepancy to different time period measurements and its own inclusion of children in its count, but otherwise finds the two reports to be “broadly consistent.”
Up to $3 billion in penalties is expected to be collected in 2016 as a result of people who fail to sign up for coverage from the marketplace. As of October of last year, the IRS had received $2 billion in penalty payments
The report finds that an anticipated short-term savings was impacted by a lower-than-expected enrollment in the health-care marketplace, as well as a Supreme Court decision making state expansion of Medicare optional. Over the long term, however, the CBO still anticipates holdout states, such as Texas and Florida, to accept the expansion, resulting in a higher overall 10-year cost than was estimated last year.
In January, Louisiana’s recently-elected Gov. John Bel Edwards, a Democrat, signed an executive order accepting the Medicare coverage for the state. Former Republican Gov. Bobby Jindal had been a staunch opponent of the Affordable Car Act and rejected the expansion throughout his administration.
Some states have adopted policies for covering patients, but have not fully expanded Medicare coverage. Wisconsin has rejected the federal funding, but still covers residents earning below the federal poverty line under its Badgercare program.
The CBO warned as early as two years ago that it would not be able to easily compare the cost of ACA against the possibility that it had not been passed, since the law is tied to a number of programs that existed prior to the law’s passage. It could continue to evaluate estimates of its insurance coverage provision, it told Congress, because those were entirely new spending programs established by the law. Provisions that augmented Medicare or Medicaid, however, could not be evaluated, as the existing programs did not have a baseline evaluation taken in 2010, prior to ACA’s passage.
It did note, however, that it would continue to investigate the budget impact of proposed legislative changes to the law. It requested an additional $440,000 in its latest budget, submitted March 10, for three additional full-time employees “devoted to analyzing the economic effects of federal tax and spending policies and health-care issues.”
“Interest in modifying or replacing the Affordable Care Act and considering changes to Medicare or Medicaid remains high,” the CBO wrote in a March 22 blog post explaining a request to increase the office’s budget.