Health care costs, budget deficit projections drop

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WASHINGTON -- The insurance expansion under the Affordable Care Act will cost $1.383 trillion during the next decade, more than $100 billion less than previous forecasts, the Congressional Budget Office said Monday.

The nonpartisan budget office's report, an update to projections from February, shows the law costing less than in previous estimates in part because of the broad and persistent slowdown in the growth of health care costs. The news might come as welcome to Democrats on Capitol Hill and in the White House who are struggling to defend the law in an election year.

"Today's CBO update shows once again that the Affordable Care Act will help reduce our deficits while offering more Americans access to quality, affordable health care," said Senate Budget Committee chairwoman Patty Murray, D-Wash. "We need to keep building on this progress, rather than turning back the clock on the millions of people who have now signed up for coverage."

The reduced estimate is attributable mostly to the budget office's cutting its projections of federal spending for insurance premium subsidies, with estimates falling by $3 billion for spending in 2014 and $164 billion over 10 years.

The budget office also issued projections that 12 million more nonelderly people would have insurance in 2014 than would have otherwise, rising to 26 million in 2017. The budget office, making projections along with the Joint Committee on Taxation, said the number of uninsured people would drop from 42 million in 2014 to 30 million in 2017.

The budget office and tax committee estimate that "the insurance coverage provision of the ACA will increase the proportion of the nonelderly population with insurance from roughly 80 percent in the absence of the health care law to about 84 percent in 2014 and to about 89 percent in 2016 and beyond," the report said.

In addition, the CBO trimmed its estimates of the penalties that individuals would pay for failing to purchase coverage, and that businesses would pay for refusing to cover their employees. It estimates that individuals will make $46 billion in payments over a decade, and employers, $139 billion.

Despite the significant costs of the insurance expansion, the budget office said that overall the Affordable Care Act should reduce deficits. In a separate report, the budget office also trimmed its estimate of this year's fiscal deficit.

In the 2014 budget year, it forecasts the government's shortfall to be $492 billion, or about 2.8 percent of economic output. In February, the budget office had estimated the deficit would be about $23 billion higher.

The smaller deficit projection is a product of lower outlays for discretionary programs and net interest payments, the budget office said. It also cut its estimate of the cumulative deficit from 2015 through 2024 by $286 billion.

In the past five years, the deficit has fallen precipitously because of the economic recovery, spending cuts and tax increases.

The budget office projects the deficit to fall by a third between last fiscal year and this fiscal year alone.


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