Implementing Health Reform. On January 25, 2016, the Congressional Budget Office (CBO) released The Budget and Economic Outlook, 2016 to 2026. The report does not update completely the Affordable Care Act (ACA) estimates found in the CBO’s March 2015 Baseline Report (a complete update will not occur until this March’s report), but it does provide some new information.
The CBO had estimated in its March 2015 baseline report that 21 million individuals would be covered through the marketplaces by 2016. Enrollment has been much lower than projected, a fact noted frequently by ACA critics. The January 25, 2016 report clarifies that the 21 million number had included 15 million who would be covered through the marketplaces with premium tax credits and an additional 6 million who would purchase unsubsidized coverage through the marketplaces.
The CBO now projects that 13 million will be covered through the marketplaces for 2016, including 11 million with subsidized coverage and 2 million without. Half of the 8 million enrollee discrepancy between the March 2015 and January 2016 enrollment numbers is due to a reduced estimate in the number of individuals projected to enroll in the marketplaces without subsidies.
The CBO expects that most of these individuals will now purchase coverage directly with an insurer. The CBO also dialed back its projections for marketplace enrollment for 2015 from 11 million to 9.5 million, with the difference entirely due to a reduction in the projected number of unsubsidized enrollees.
The CBO’s projection of 13 million marketplace enrollees is still higher than the 9.4 to 11.4 million that the Centers for Medicare and Medicaid Services (CMS) project will be covered by the end of 2016, but 2016 enrollment is so far coming in at the high end of the CMS projections, so final enrollment might be somewhere in between the CBO and CMS estimates. Reduced enrollment will, of course, reduce the cost of the program — the CBO projects a reduction of $7 billion over the next 10 years.
While the CBO has reduced short-term marketplace enrollment growth projections, it is increasing its projections of the growth of the Medicaid program. Medicaid spending grew by $48 billion (or 16 percent) in 2015, after increasing by $36 billion (or 14 percent) in 2014. Enrollment of newly eligible individuals grew by 55 percent between 2014 and 2015, from 6.1 to 9.6 million. The CBO projects Medicaid spending to increase by 9 percent from 2015 to 2016, but only expects one million additional monthly enrollees. CBO is increasing its 2025 projection for Medicaid enrollment under the ACA expansions from 11.5 to 14.5 million, and its 2025 projection for increased spending for these enrollees in 2025 from $97 to $114 billion.
The CBO does not project in its January report how many people are or will remain uninsured. Reduced expectations in marketplace enrollment could increase the number of uninsured, but increased Medicaid enrollment and off-exchange individual market enrollment would reduce it. The CBO report also notes that the unemployment rate is projected to fall to 4.5 percent in 2016, below its “natural rate” of 4.8 percent. This would mean that more people have employer coverage, further reducing the number of the uninsured (and explaining some of the slack in marketplace enrollment.)
The report notes the effect of the moratorium on Affordable Care Act (ACA) taxes in the budget bill on revenues — a reduction in the health insurance fee from $11 million in 2016 to $1 million in 2017 and further reductions from the delay of the excise tax on high-cost health plans and the medical device tax. This is only a fraction of the $425 billion in increased revenues and $324 billion in increased outlays that CBO projects to result from the 2016 Budget bill over the next 10 years. The CBO projects that a repeal of the three health care taxes would reduce further revenues by $256 billion over the next decade.
The CBO report continues to project that the ACA will result in reduced labor force participation, specifically because it increases the marginal tax rate for high-income employees and the effective tax rate increase for individuals who lose Medicaid or health insurance subsidies. The CBO also notes that a number of other factors, such as the aging of the population and the lingering effects of the recession, will also depress labor force participation, but that strong employment demand will offset these forces.
from Health Affairs Blog http://ift.tt/1Pi2fJH
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