Taxpayers have good reason to celebrate when it comes to the new healthcare law. According to an announcement made on March 9 by the Congressional Budget Office, the overall cost of the Affordable Care Act will be about $142 billion less than previously expected. That change represents an 11 percent decrease and indicates that the new law is working more efficiently than even supporters could have imagined.
Five major reasons account for lower ACA costs over the next decade:
- Decreased nationwide spending on healthcare
- Slowly rising health insurance premium costs
- Fewer lost jobs as a result of the ACA
- Fewer people signing up for alternate plans
- More people than estimated with existing coverage
Participation in programs like Medicaid and the Children’s Health Insurance Program also affects how much the ACA will cost, but it’s not clear how well these programs will do. For one thing, some states have chosen not to expand the Medicaid program, which leaves a lot of people out of luck for getting coverage at all. On the other hand, decreased participation in assistance programs means that less funding will go toward these programs, which will drive down the cost of the ACA even further.
Healthcare costs traditionally rise each year, which is one factor that led to the creation of the Affordable Care Act in the first place. Due primarily to the recession, healthcare spending has decreased much more than anticipated in recent years. A lot of families continue to struggle with everyday expenses in a recovering economy. Fulfilling costly prescriptions, following up with specialists and even visiting the doctor for a cold are luxury expenses for some Americans. The upside to decreased spending on healthcare costs is a reduction in price tag for the ACA. Even though economists suggest that spending will increase as the economy recovers, the overall cost of the ACA will be less than expected.
Premium Cost Increases
With a decrease in national healthcare spending come lower premium costs. In 2014, premium costs did not skyrocket as predicted by those who opposed the Affordable Care Act. Premium costs rise naturally with time and inflation, but last year’s increases indicated a conservative approach on the part of insurers. In some states, consumers paid even less for their premiums than they might have before the ACA took effect. Lower premium costs require less funding, which then drives down the cost of the new law. Healthcare officials suspect that premiums will rise significantly between 2016 and 2018, but costs should slow down again beginning in 2019.
Better Job Security
At the outset of the ACA, people who were opposed to the new law claimed that higher healthcare costs and government-mandated insurance would force people out of jobs. This simply isn’t the case for millions of Americans. Fewer people lost their jobs than predicted, and the nation is recovering slowly but surely from the recession. Likewise, employers have not universally cut hours, demoted full-time workers to part-time status or inflicted significant damage on their staff as a result of the ACA. Employer-sponsored coverage reduces the cost of the ACA on taxpayers nationwide.
Not only has the Affordable Care Act provided affordable coverage to millions of Americans over the past two years, but the new law also delivers quality insurance. Polls and surveys consistently reveal that consumers are happy with their plans. Satisfied customers support the system, and the system works more efficiently as a result. Plus, people with work-based insurance have also been able to keep their plans. With fewer people enrolled on the marketplace due to job-sponsored insurance, the ACA can work more effectively and serve the people who need real help.
The Already Insured
It turns out that fewer people were uninsured before the Affordable Care Act became law than was previously estimated. Based on new information, the Congressional Budget Office now projects a lower overall cost of the ACA because fewer people need to become insured. Those who have plans in place are less likely to shop around on the exchanges since they could already afford insurance. The CBO also suggests that about 25 million people will remain uninsured by 2025, a number that includes undocumented immigrants, people without access to Medicaid and those who simply refuse to get covered.