CBO lowers estimate of health care law costs

WASHINGTON — The Affordable Care Act will cost $5 billion less than originally projected for 2014, according to a Congressional Budget Office report released Monday.

From 2015 to 2024, the law is now expected to cost $1.38 trillion, or $104 billion less than prior projections, with a $36 billion cost in 2014.

Net costs in 2014 are due almost entirely to subsidies paid out to those who make less than 400% of the federal poverty level who enrolled in the health insurance exchanges, as well as the Medicaid expansion in some states.

The government will pay out $1.84 trillion through 2024 for health exchanges and subsidies, Medicaid, the Children's Health Insurance Program and tax credits for small employers. But the budget office expects $456 billion in penalty payments from those who do not have health insurance as well as excise taxes on high-premium insurance plans, income taxes for those who make more than $200,000 a year, and payroll taxes that come from changes in employer coverage.

CBO officials attributed the changes in projections to changes in the law, the Supreme Court decision not to require states to expand Medicaid, administrative actions, new information, improvements to modeling methods, and lower projected health care costs for the federal government and the private health sector.

While CBO considered only insurance provisions for the Affordable Care Act for this report, the office concludes that other pieces of the law will further bring costs down.

The CBO estimated that silver plan premiums are about $3,800 this year, and they expect it to rise "slightly" in 2015 to about $3,900. After that, they expect average premiums on silver plans to go up to $4,400 in 2016 and $6,900 in 2024—about 6% per year from 2016 to 2014. That's about 15% lower than CBO projected in the fall of 2009. A silver plan is the second-highest plan available through the exchanges, and the most popular plan.

CBO concluded that by 2024 there will still be 31 million uninsured people in the USA, thought that figure is 26 million less than had the law not passed. Among the uninsured will be people who decline to buy insurance,unauthorized immigrants, and poor people who choose not to enroll in Medicaid or who live in states that did not expand Medicaid eligibility.