As the open enrollment period for the ACA comes to a close over the next week and a half, supporters of the healthcare law and taxpayers nationwide have reason to celebrate: According to the Congressional Budget Office, the Affordable Care Act will cost 20 percent less than previously anticipated. Early estimates about the final cost of the ACA were difficult to determine thanks to variables like enrollment, Medicaid expansion and subsidy awards. With those figures more secure as the second enrollment period winds down, the CBO can more accurately gauge how the new law’s finances will play out over the next decade.
Estimating the Variables
Back in 2010 before the law was made official, experts with the CBO suggested that the final cost of the new program would run anywhere between $1 and $2 million by the time everything was fully implemented. Now, the office has a much clearer picture of the actual figures involved. By 2025, the ACA should cost around $1.35 trillion dollars. In 2015, the new law will cost about $76 billion. Estimates in April 2014 suggested that the program would cost $177 billion, which is a difference of $101 billion. Several factors have led to the CBO’s updated estimates this year:
- Lower enrollment numbers
- High enrollment in cheaper bronze plans on the marketplace
- Greater enrollment in Medicaid in newly expanded areas
- Smaller premiums due to decreased insurance inflation
Experts weren’t sure how to estimate enrollment in 2014 or 2015. Many healthcare officials expected people to choose more costly plans, which would have cost the government more money in subsidies. Likewise, lower enrollment numbers overall and greater participation in Medicaid cut down on the amount that the federal government had to spend on individual taxpayers. On the positive end, inflation was much lower than anticipated this year. This factor alone contributed significantly to reduced premiums and less need for subsidies.
Changes for the Future
Going forward, the CBO expects that enrollment numbers will reach 12 million in 2015 and 21 million by 2016. There will always be people who refuse to enroll even if they’re eligible, but the government is optimistic about the new law’s performance based on enrollment numbers and CBO projections.
More Americans are expected to lose work-based coverage in the coming years, which could also impact the number of enrollments in marketplace plans nationwide. Additionally, participation in Medicaid and the Children’s Health Insurance Program will reduce the number of subsidies allotted to individual taxpayers. While only about half of the states chose to expand Medicaid under the provisions of the Affordable Care Act, it’s expected that more states will expand the program over the next few years.
One question lingers for the ACA: How will subsidies survive the Supreme Court ruling in June? This summer, the Supreme Court will decide whether subsidies can be awarded to people who live in states without a state-run health insurance exchange. If the court decides against the subsidies, then millions of Americans would lose the financial assistance that makes the ACA affordable for them. Time will tell what impact this decision has on the future of the law.
In any case, it’s clear that Obamacare is working for many Americans. As the program progresses toward its goals, the CBO expects that it may readjust its estimates even further to reflect lower premium prices and other factors.
The deadline to enroll in a plan for 2015 is February 15.