CBO: Slowing costs reduce price of health care overhaul

AP News
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Posted: Mar 09, 2015 2:48 PM

WASHINGTON (AP) — Slowing health care costs are driving down the price tag of President Barack Obama's health overhaul, just as the Supreme Court is weighing whether to strike a key part of the law.

Estimates released Monday reduce the projected cost to taxpayers by $142 billion over the next decade. That's an 11 percent drop from previous estimates.

The nonpartisan Congressional Budget Office cited two reasons for the decline: Health insurance premiums are rising slower than projected, and new data show there were fewer people without health insurance before the law. Fewer people without insurance means slightly fewer people will need to take advantage of the law to gain coverage, CBO said.

Still, over the next decade, the budget office said 24 million to 25 million people a year will get coverage because of the law.

White House spokesman Josh Earnest called the projections the "latest in a long line of data points" showing that Obama's health law was holding down health costs and generating economic benefits for families and businesses. He said one of the goals of the legislation was to address the threat that growing health costs pose to the broader economy.

"We're pleased to see that even after just a few years of being in effect, that the impact is both noticeable and positive," Earnest said.

CBO released updated spending and deficit projections for the upcoming decade. The federal budget deficit will total $486 billion for the budget year that ends in September, nearly matching the lowest shortfall of Obama's term in office.

The forecast includes mixed signals for Congress.

Over the next decade, annual budget deficits will be smaller than previously thought because spending on private health insurance is expected to grow at a slower rate, CBO said. The combined deficits will be $431 billion less than the budget office projected in January.

Beyond the next decade, however, deficits will soar again as more baby boomers retire and start receiving Social Security and Medicare, the government health insurance program for older Americans. In 2025, the budget office says the annual deficit will once again hit $1 trillion, unless Congress acts.

The annual deficit topped $1 trillion in each of Obama's first four years in office, including a record $1.4 trillion in 2009.

The deficit dipped to $485 billion in the budget year that ended last September.

Congress' Republican-run budget committees will soon start crafting their own spending blueprints for fiscal 2016, which starts on Oct. 1.

The Supreme Court took up a new challenge to Obama's health overhaul last week in a dispute over the tax subsidies that make insurance affordable for millions of Americans.

The justices are trying to determine whether the law makes people in all 50 states eligible for federal tax subsidies to cut the cost of insurance premiums. Opponents say that only residents of states that set up their own insurance markets, also known as exchanges, can get federal subsidies to help pay the premiums.

Roughly three dozen states did not set up their own exchanges and rely on the federal healthcare.gov. Residents in these states could lose subsidies if the Supreme Court rules against the federal government.

CBO says the health care law will cost the federal government $1.2 trillion over the next decade. The agency has been steadily reducing the projected cost of the law since it was enacted 2010.

For example, in 2010, the budget agency projected that the insurance-related provisions of the health law would cost the federal government $710 billion from 2015 through 2019. The most recent projections put the five-year cost at $506 billion, a reduction of 29 percent.

In Monday's report, CBO noted the uncertainties of projecting health care spending.

"Projections of spending by private health insurers are highly uncertain, especially because the causes of the pronounced slowdown in spending in the past several years are not well understood," CBO said. "Projections of growth in premiums for private health insurance offered through the exchanges are even more uncertain because the exchanges are so new."

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Associated Press writer Josh Lederman contributed to this report.

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