Tag: "CBO"

CBO: Obamacare’s Uninsured Up 5 Million, Medicaid Dependents Up 16 Million Since Initial Estimate

half full or half empty?

(A version of this Health Alert was published by Forbes.)

Last week’s Congressional Budget Office’s Updated Budget Projections: 2016 to 2026 significantly reduced estimates of Obamacare’s benefits, relative to CBO’s estimates published in 2010, when the law was signed:

  • In 2010, CBO estimated Obamacare would leave 22 million uninsured in 2016 through 2019. This month, CBO estimates Obamacare will leave 27 million uninsured through 2019 – an increase of almost one quarter.
  • In 2010, CBO estimated Obamacare would leave 163 million with employer-based health benefits in 2016 and 159 million in 2019. This month, CBO estimates Obamacare will leave only 155 million with employer-based plans. The number will decrease to 152 million in 2019.
  • In 2010, CBO estimated Obamacare exchanges would enroll 21 million people in 2016, increasing to 24 million in 2019. This month, CBO estimates Obamacare’s exchanges will enroll only 13 million people this year, and 20 million in 2019.
  • In 2010, CBO estimated Obamacare would result in 52 million Americans remaining or falling into dependency on Medicaid or the Children’s Health Insurance Program, the welfare programs jointly funded by state and federal governments that subsidizes low-income households’ health care, in 2016. CBO estimated that figure would drop slightly to 51 million in 2019. This month, CBO estimates 68 million will be dependent on the program this year through 2019 – an increase of almost one third in the welfare caseload.

Obamacare’s Cost per Beneficiary Explodes with Shrinking Enrollment

CBOThe Congressional Budget Office’s latest budget estimate shows Obamacare’s costs per beneficiary have exploded, as enrollment in Obamacare’s broken exchanges collapses. January’s update estimates 2016 exchange enrollment at 13 million people (p. 69).  Although the Administration had previously downgraded its estimate of Obamacare enrollment, this is the first significant change by the non-partisan CBO.

What is really shocking is the January update still estimates tax credits, which subsidize insurers participating in exchanges, will cost taxpayers $56 billion this year (p. 182). That amounts to about $4,308 per enrollee (although not all are subsidized). Back in March 2010, CBO estimated that 21 million people would be covered in exchanges in 2016, for a total cost of $59 billion in tax credits (pp. 20-23). That would amount to about $2,810 per enrollee.

Obamacare’s Shrinking Costs Should Bring Tax Cuts

debtThe Congressional Budget Office’s March budget baseline updates its estimates of costs and insurance coverage due to Obamacare. The March baseline estimates that the gross cost of Obamacare’s subsidies and Medicaid spending for the years 2016 through 2025 will be $1.7 trillion, $286 billion less than it had estimated in the January baseline.

The CBO calculates a so-called “net cost” by subtracting revenues from businesses and individuals paying the mandate/fine/penalty/tax for not buying Obamacare, the “Cadillac tax” on high-cost health cost insurance, and the effect of changes in taxable compensation. This net cost has shrunk by $142 billion to $1,207 billion.

Even more impressive are the reductions in the cost of Obamacare from the CBO’s original March 2010 score of Obamacare. The two estimates overlap for the seven years, 2015 through 2021. The original estimate was that Obamacare’s gross cost would be $1.4 trillion over the period, and the net cost $1 trillion. These have shrunk to $992 billion and $751 billion, reductions of 28 percent and 29 percent.

When the CBO issues a new baseline, it updates its estimate of Obamacare’s insurance provisions. What it does not do is update its estimate of revenues from the host of other taxes in the Affordable Care Act, such as the medical-device excise tax.

So, it is not immediately obvious that Obamacare’s shrinking cost estimates should open the door to cutting some of those harmful taxes – which they should.

4 to 7 Million Will Be Fined under ObamaCare’s Individual Mandate

From the Congressional Budget Office and the Joint Committee on Taxation:

CBO and JCT estimate that 23 million uninsured people in 2016 will qualify for one or more of those exemptions. Of the remaining 7 million uninsured people, CBO and JCT estimate that some will be granted exemptions from the penalty because of hardship or for other reasons.

All told, CBO and JCT estimate that about 4 million people will pay a penalty because they are uninsured in 2016 (a figure that includes uninsured dependents who have the penalty paid on their behalf). An estimated $4 billion will be collected from those who are uninsured in 2016, and, on average, an estimated $5 billion will be collected per year over the 2017–2024 period.

(CBO, Payments of Penalties for Being Uninsured Under the Affordable Care Act: 2014 Update)

Headlines I Wish I Hadn’t Seen

So This is What a Ponzi Scheme Looks Like

The unfunded liability in Medicare, the trustees tell us, is $34 trillion over the next 75 years. Looking indefinitely into the future, the unfunded liability is $43 trillion — almost three times the size of today’s economy. Based on more plausible assumptions, such as those reflected in the “alternative” scenario for Medicare produced by the Congressional Budget Office in June 2012, the long-term shortfall is more than $100 trillion.

From an editorial by Larry Kotlikoff and me in the Wall Street Journal today.

Conservatives Debate Exchanges

Douglas Holtz-Eakin, former director of the Congressional Budget Office and chief domestic policy adviser to John McCain’s presidential campaign, created quite a stir last week when he urged states to set up their own health insurance exchanges under ObamaCare. This is from The Hill:

The healthcare law envisions each state setting up its own exchange — a sort of Expedia or Orbitz for health insurance — but authorizes a federally run fallback in states that don’t act on their own…But Republican governors have rejected state-based exchanges, saying they won’t play any part in helping to implement a law they oppose.

Operating a state-based exchange gives the states the power to make key decisions about their marketplace, such as whether to negotiate directly with insurance plans or open the market up to any plan that meets certain minimum criteria. States could also decide whether to preserve or eliminate the individual market outside of their exchanges, or require non-exchange plans to meet the same criteria as exchange plans.

Punting those decisions to the federal government is “choosing a slippery slope toward precisely what liberal Democrats want: a federally controlled healthcare system that would be the first step toward European-style, single-payer healthcare,” Holtz-Eakin wrote.

Holz-Eakin’s NRO piece. Jim Capretta and Yuval Levin give the other side. My debate with Linda Gorman on this issue.

The Obama Recession

This graph is from a new study from the Congressional Budget Office:

Here is Neil Irwin at the Ezra Klein blog:

This economic recovery has been a big disappointment relative to what the United States has usually experienced after a recession. Growth has been 9 percent below what was seen in past recoveries on average in its first three years…The new CBO report claims that two-thirds of the underperformance of the economy over the past three years compared to a typical recovery is due to a slower rate of growth in potential GDP. Only one-third, in this analysis, is due to factors related to this recession.

Cost for ObamaCare Soar

When the [Affordable Care Act] passed in June 2010, the Congressional Budget Office projected the budget cost between fiscal 2012 and fiscal 2019 to be $462 billion. By June 2012, the cost for these same years had jumped to $574 billion, an increase of nearly 25 percent.

Entire report from the American Action Network.

The Demonstration Projects Are Not Working

  • A paper in Health Affairs (subscription required) released last week found that even “aggressive” improvements in performance measures by accountable care organizations caring for diabetic patients would result in minimal cost savings — and “after the costs of performance improvement, such as additional tests or visits, are accounted for,” those minimal cost savings could become cost increases.
  • A recent analysis of North Carolina’s patient-centered medical home initiative found the program yielded no budgetary savings, contrary to expectations.
  • More broadly, the Congressional Budget Office noted earlier this year in a major report that most Medicare demonstration programs over the past several decades have NOT saved money.

Source: Chris Jacobs.