I’ve already noted in a separate post that new Congressional Budget Office projections show President Obama’s health care law will cost $1.76 trillion over 10 years, rather than the $940 billion originally advertised. But there are lots of other moving parts in the CBO’s updated estimates that are worth deeper elaboration.
The big picture takeaway is that due mostly to weaker economic projections, the CBO now projects that more people will be obtaining insurance through Medicaid than it estimated a year ago at a greater cost to the government, but fewer people will be getting insurance through their employers or the health care law’s new subsidized insurance exchanges. Overall spending will be higher than estimated a year ago, but increased revenue from penalties and taxes will more than offset this. Also interesting: CBO now expects two million fewer people to be covered as a result of the health care law than previously projected.
It’s worth keeping in mind that what the CBO did today was update its forecasts for the cost of expanding insurance coverage under the health care law. That represents, by far, the bulk of the spending in the legislation, but it doesn’t constitute a full rescoring of the law or a revised deficit estimate. That would have to include estimates for all the taxes, Medicare cuts and other spending in the law. Also, the $1.76 trillion cited above is for the years 2013 through 2022, but if we want to compare changes to last year’s estimates, we have to use the comparable years of 2012 through 2021. (Estimates for 2022 only became available today.)
The CBO now projects that from 2012 through 2021 the federal government will spend $168 billion more on Medicaid than it expected last year, $97 billion less on subsidies for people to purchase insurance on government-run exchanges and $20 billion less on tax credits to small employers. That works out to a $51 billion increase in the gross cost of expanding coverage from what the CBO estimated a year ago. However, the CBO also expects the federal government to collect more revenue from penalties on individuals and employers, as well as other taxes. These revenue increases will more than offset the spending increases, according to the CBO, so it now expects the cost of Obamacare during those years to be $48 billion lower.
It’s also worth noting that we were told time and again during the health care debate that the law didn’t represent a government takeover of health care. But by 2022, according to the CBO, 3 million fewer people will have health insurance through their employer, while 17 million Americans will be added to Medicaid and 22 million will be getting coverage through government-run exchanges.
Check out the full CBO report here.