Health-care law will cost taxpayers less than expected, CBO says
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Version 0 of 1. President Obama’s health-care law will cost taxpayers substantially less than previously estimated, congressional budget officials said Monday, in an upbeat note for a program that has faced withering criticism since its passage five years ago. The nonpartisan Congressional Budget Office attributed the savings to spending on medical care in coming years that will not be as great as previously forecast. As a result, the agency said, insurers are not expected to charge Americans as much for coverage, and the government will save on subsidies for low- and moderate-income people. What’s more, the CBO has concluded that companies are not canceling health insurance policies as often as had been anticipated earlier this year. Fewer Americans consequently are planning to sign up for insurance under the Affordable Care Act, generating more taxpayer savings. In total, the health-care law will cost taxpayers $142 billion, or 11 percent, less over the next decade than estimated in January. The cost of providing subsidies for people to buy insurance on the state and federal marketplaces — the centerpiece of the law — will be 20 percent lower than projected. The savings are a positive development for a program that has been battered by bad news, from the botched rollout of the main enrollment Web site in 2013 to a legal challenge before the Supreme Court last week. “There’s certainly a lot of rhetoric by the law’s opponents that costs are going to explode, that costs are out of control, that Obamacare had no cost containment in it,” said John Holahan, an economist at the Urban Institute. “I can’t see how people can continue to say those things.” The report is one of a growing number of assessments of the law’s impact on the nation’s economy, budget outlook and health insurance market — long-debated topics since before its passage in March 2010. On Monday, Health and Human Services Secretary Sylvia Mathews Burwell announced that as of Feb. 22, nearly 11.7 million people across the country had signed up for or reenrolled in health insurance through the state and federal marketplaces. Last week, Gallup reported that the share of Americans without insurance coverage continued the slide that began after the law went into effect, with 12.3 percent of the population uninsured at the end of February. The new CBO projections come amid a roiling debate over whether the Affordable Care Act has helped to restrain health-care spending in recent years. Many health economists expected that spending would pick up more as the economy recovered from the 2007-2009 recession. But the slowdown in spending has endured. “It’s lasted longer than a lot of people thought it would,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation. The Obama administration has insisted that the ACA is part of the reason. But conservatives have questioned whether the law is having such an impact — and argue that even if it is, that shouldn’t distract from the overall taxpayer cost. The law is still expensive, at $1.2 trillion in spending over 10 years. “You can say it is a factor, but to what degree it is contributing, no one can answer that question,” said Alyene Senger, a research assistant at the conservative Heritage Foundation. “And it does add significant amounts of health-care spending.” Controlling health-care costs remains one of the biggest challenges facing the government. The CBO has repeatedly warned that over the coming decades, health and retirement spending will increasingly overwhelm the federal budget. In designing the Affordable Care Act, administration officials sought to limit health spending by better managing Americans’ use of health care. For example, under the Medicare program for the elderly, the law is trying to shift payments to doctors for quality of care, rather than the number of procedures. Such “bundled” policies aim to reduce the incentives for doctors to order more expensive procedures. Changes in Medicare tend to have strong effects throughout the entire health-care industry. Between 2000 and 2006, total nationwide spending on medical care increased by an average of 7.7 percent each year, according to data from the Centers for Medicare and Medicaid Services. The average yearly increase between 2009 and 2013, the most recent year for which data is available, was 3.9 percent. Chapin White, a Rand Corp. health economist who worked at the CBO at the time the Affordable Care Act was passed, said he and his colleagues didn’t anticipate how effective the law would be in containing costs. “We probably underestimated the impact,” he said. He said that when insurers gained the opportunity to sell plans to new customers on the exchanges, they found ways of reducing costs in order to advertise cheaper premiums. “The premiums are not going to grow as rapidly as they have in the past,” said Joseph Antos, an economist with the American Enterprise Institute. “Their out-of-pocket costs, they’re going to grow as well, but they’re not going to grow as fast as they would have without this general slowdown.” On Monday, the White House sought to take credit for the gains. “It certainly is only the latest in a long line of data points that indicate the Affordable Care Act is contributing in a very positive way to holding down the growth of health-care costs in this country, in a way that has very real economic benefits, not just for middle-class families across the country but also for businesses, large and small,” White House press secretary Josh Earnest said. “One of the goals here has been to recognize that the unrestrained growth in health-care costs did pose a threat to our government’s finances but also did contribute to some weakness in our economy.” Other factors are also at play. Previously, many experts predicted that the law would force businesses to drop workers from their company insurance plans, and the CBO had warned that the law could reduce full-time employment as workers chose to quit their jobs to take advantage of newly available government assistance. But the report found that a greater-than-expected number of workers are employed by large companies, which are less likely to revoke health benefits. It also found that fewer people lacked coverage to begin with, meaning they won’t need to rely on Medicaid or subsidized insurance. |