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Saturday, Oct 25, 2014
Health & Fitness

Report projects health care costs to dip slightly


Published:

WASHINGTON — The Affordable Care Act’s health insurance subsidies will cost a little less than previously thought, according to a new report released Monday.

The Congressional Budget Office predicts that health insurance subsidies under the so-called “Obamacare” plan will total a little more than $1 trillion over the next 10 years, instead of almost $1.2 trillion initially estimated.

CBO said the 8 percent cut results largely from tighter cost controls by insurance companies offering plans on health care exchanges. Generally speaking, the plans offered on the exchanges pay health care providers less and have tighter management of patients’ treatment options, and that means lower premiums and taxpayer subsidies.

Overall, the report is positive news for the White House and its Democratic allies on Capitol Hill, who are under assault politically after the health care law’s troubled roll-out and as it remains unpopular with many voters.

Medicaid adds almost $800 billion in costs over the decade. Overall, however, the health care law reduces the deficit because of tax hikes, penalties paid by people and businesses that forgo insurance, and curbs on Medicare.

The report also predicts that premiums won’t skyrocket next year as some fear. Insurance companies are no longer allowed to reject people for pre-existing health conditions. But CBO does say that premiums will rise moderately from an average of $3,800 in 2014 to an average of $3,900 for 2015, which would be good news for the Obama administration if the projections panned out.

Premiums have come in lower than CBO projected a few years back. The agency also says that people signing up next year will be younger and healthier than those who enrolled this year.

The new estimates of the health care law are contributing to a slightly improved overall deficit picture. CBO said in a separate report on Monday that federal budget deficits over the coming 10 years will be $286 billion less than estimated in February. This year’s deficit would dip to $492 billion from the $514 billion figure cited two months ago.

CBO is a nonpartisan congressional agency that does research and cost estimates for lawmakers.

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