CBO Updates The Estimated Costs Of The Budget Reconciliation Act

Implementing Health Reform. On January 4, 2016, the Congressional Budget Office (CBO) released an updated estimate of the cost of the Budget Reconciliation Act as passed by the Senate. The CBO now estimates that the legislation would reduce federal outlays by $1,330 billion over 10 years, primarily by eliminating the Medicaid expansions, premium tax credits, and cost-sharing reduction payments. It would decrease revenues by $1,052 billion over the same period by eliminating the Affordable Care Act’s (ACA) tax increases. The bill would decrease the deficit by $318 billion over 10 years without considering the macroeconomic effects of the bill, $516 billion considering macroeconomic effects.

The January 4, 2016 estimate revises an earlier CBO estimate, taking into account the effects of the intervening Consolidated Appropriations Act of 2016, which delayed and amended certain ACA taxes, as well as certain technical revisions. The CBO now estimates that Budget Reconciliation Act will save an additional $36 billion over 10 years; $42 billion considering macroeconomic effects. The additional revenue is at least in part due to the fact that the revenue that the CBO estimated would be lost by the Reconciliation Act will now be lost in any event due to the Budget Bill, thus the Reconciliation Act will have a smaller effect on revenue.

The January 4, 2016 does not discuss the effects of the Reconciliation Act on insurance coverage, but an earlier analysis, the CBO estimated that enactment of the Budget Reconciliation Act would increase the number of uninsured by 22 million in most years after 2017. The CBO stated that the Reconciliation Act’s repeal of the ACA subsidies and mandates while leaving the market reforms in place

. . . would result in a less healthy population in the nongroup market and correspondingly higher average premiums. In addition, the market for nongroup insurance, particularly in smaller states, could become unstable, leading to very low to no participation by insurers and consumers.

The CBO concluded that this would in turn result in a reduction in the number of individuals covered in the nongroup market and an increase in the number of the uninsured, but did not estimate how great this effect would be.

The Budget Reconciliation bill in its current form has been passed by the Senate and is expected to be passed by the House during the week of January 4. It will then be vetoed by the President.

from Health Affairs Blog http://ift.tt/1UtZa9b