Yesterday, in its budget and economic outlook for the next decade, the Congressional Budget Office substantially changed its short-term Affordable Care Act estimates in ways that show the law is performing far worse than expected. CBO’s new projection of 13 million exchange enrollees in 2016 is nearly 40% below previous expectations. CBO’s also projects that the average subsidy per enrollee in 2016 will increase by about 18% relative to its March 2015 ACA estimate—an indication that enrollees are both less healthy and poorer than the agency originally projected.
Yesterday, the nonpartisan Congressional Budget Office released its annual ten-year Budget and Economic Outlook. The document contains the CBO’s updated estimates for economic growth, employment, and the nation’s fiscal health. The most notable change was to enrollment in Obamacare’s health insurance exchanges. The CBO, bowing to reality, slashed their 2016 estimates of exchange enrollment from 21 million to 13 million. Furthermore, the CBO implied that it expects exchange enrollment to peak at 16 million: a far cry from the 24 million it predicted last March.
In 2015, the U.S. federal government spent more on healthcare than on Social Security for the first time. The Affordable Care Act’s expansion of Medicaid and the growing availability of subsidies for exchange plans are driving much of the higher spending.
Enrollment in the ACA’s insurance exchanges will hover around 13 million in 2016, the Congressional Budget Office said in an expanded economic report Monday, down from its previous estimate of 21 million but still above HHS’ most optimistic projection.
Federal spending on major health care programs will jump by $104 billion, or 11.1%, this year, according to Congressional Budget Office estimates published on Monday.
Those figures include a $24 billion increase stemming from a shift in the timing of certain Medicare payments from 2017 into 2016. Today’s CBO figures are a detailed version of the broader estimates published last week.
The nonpartisan CBO projected in its 2016-2026 Budget and Economic Outlook that spending on federal health programs will make up 5.5% of the country’s gross domestic product this year, and reach 6.6% by the end of 2026.
The Congressional Budget Office (CBO) issued a new budget forecast last week. It should be a wake-up call to policymakers, and to the candidates running for president. It is also a clear indictment of fiscal policy during the Obama presidency.
The forecast shows annual federal budget deficits rising throughout the coming decade, pushing total federal debt to levels well above the historical norm. CBO projects the federal budget deficit will be $544 billion in 2016, or 2.9 percent of GDP. By 2026, the annual deficit will be nearly $1.4 trillion, or 4.9 percent of GDP. Over the period 2016 to 2025, CBO expects the federal government will need to borrow an additional $9.4 trillion, pushing total federal debt up to $23.8 trillion, or 86 percent of GDP.
The deficits projected in CBO’s forecast, and the level of debt they would cause, are almost unprecedented in the nation’s history.
Last week’s seven-candidate debate hosted by the Fox Business Network once again found much to discuss in terms of national security issues, immigration law enforcement, even a little economic policy, and, of course, the latest round of character attacks and counter-attacks. Still missing in action: at least the first subcutaneous probe of where the respective candidates stand on health policy issues.
Based on recent performance, it’s questionable whether health policy has attracted sufficient interest among the media and Republican primary voters to command more than a few seconds on the debate stage. But it’s not for lack of potential lines of inquiry.
Here are some questions to the candidates from Tom Miller of the American Enterprise Institute that still await new rounds of oversimplified, evasive, or (one might hope) thoughtful answers.
Sen. Sanders claims he can provide free health care for all Americans even while saving $6.3 trillion over the next 10 years. In truth, the actual cost of the Sanders health plan will be at least 40% more than he claims. In the worst case, it will be 49% higher.
Moreover, the increase in federal taxes required to fund his plan will not be the $13.8 trillion claimed by the economics professor who is advising Sanders, nor even the $28 billion estimated by fellow Forbes colleague Avik Roy: the new federal taxes required to fund the Sanders health plan will be $36.3 trillion!
In short, the Sanders health plan would require a 71% increase in federal spending over the next decade.
On Sunday, January 17—hours before the Democratic presidential debate on NBC—Vermont Senator Bernie Sanders released details of his proposal to replace the entire U.S. health care system with a universal, government-run, single-payer one. In Sanders’ eight-page campaign white paper, entitled “Medicare for All,” the self-described “democratic socialist” outlines his plan’s core principles.
Warren Gunnels, Sanders’ policy director, retained Gerald Friedman, an economist at the University of Massachusetts at Amherst, to come up with a fiscal score of the Sanders plan. Friedman estimates that the plan would require $13.8 trillion in new government spending in the decade spanning 2017 through 2016. Avik Roy of the Manhattan Institute outlines why that estimate is far too low.
While Democrats are quite eager to point out that ObamaCare has reduced the number of uninsured by 17.6 million, they have conveniently failed to point out that in 2014, American taxpayers effectively paid about $6,000 for each person who became newly covered due to ObamaCare.
Is it really worth reducing worker wages by $1,200 apiece just to cover 2.3 million young adults? And leaving aside all the chaos created by millions of cancelled policies, premium increases paid by tens of millions who received no taxpayer subsidies whatsoever to soften the blow and similar market dislocations, are ObamaCare defenders really prepared to claim that it is worth paying $6,000 apiece to reduce the ranks of the uninsured?
The flurry of budget deals struck by congressional Republicans with President Obama in the final months of 2015 will increase the federal debt by hundreds of billions of dollars in the coming decade. They also make it clear that the true state of U.S. fiscal policy is far worse than shown in official projections — which are based on policies that are not going to survive over the long run.
James C. Capretta of the Ethics and Public Policy Center explains how the budget deals will affect the implementation of ObamaCare and ultimately the U.S. economy.