In their ongoing battle to dismantle the Affordable Care Act, congressional Republicans continue to argue that skyrocketing health care costs under the 2010 legislation would add to the federal deficit, placing an “immoral burden” on future generations. A new estimate by the Congressional Budget Office (CBO), however, could challenge what has become one of the GOP’s main talking points for more than four years.
New calculations by the CBO lower the projected costs of providing health care to millions of Americans by nearly $200 million between the fiscal years 2015 and 2019. Douglas W. Elmendorf, the director of the budget office, attributed the changes to the “slowdown in the growth of health care costs,” and lower projections of government-subsidized premiums.
Four years ago, the CBO estimated that Obamacare’s coverage expansion would cost the federal government $710 billion from 2015 to 2019. According to the latest projections, that figure has been revised down to $571 billion, which represents a reduction of 20 percent.
The Affordable Care Act expanded health care coverage to historically uncovered populations by subsidizing private plans on the law’s new marketplaces and adding more low-income people to the Medicaid program. Analysts argue that’s helping to reduce long-term health care costs.
The structure of the marketplaces induced competition among insurers, which in turn slowed down premium growth for the first time in decades. Data compiled by the Center for American Progress, for example, showed that monthly payments for health insurance increased by less than 4 percent between 2014 and 2015, compared to more than 10 percent in previous decades.
Additionally, policies put in place by the health care law protected patients by imposing financial penalties on hospitals that have a high rate of readmissions or record a high incidence of mistakes. The Affordable Care Act also penalizes nonprofit hospitals that collect exorbitant fees from low-income patients. Those changes have brought forth positive results: the number of patients who had new infections fell by 17 percent since the passage of the Affordable Care Act, saving an estimated $12 billion in health care costs. Hospital readmissions also fell by two percentage points, preventing more than 150,000 unnecessary hospitalizations in two years.
While the aforementioned points could give Obamacare supporters some ammunition during this legislative session and upcoming Supreme Court case against the law, CBO officials contend that the decrease in estimated costs also resulted from factors that some people may not find appealing. For example, an excise tax on high premium insurance holders shows promise of generating more than $149 billion within eight years once it goes into effect in 2018.
Another unfortunate reality concerns nearly 3 million uninsured people, many of whom are low-income and hail from African American and Latino communities in the South. They currently fall within the Medicaid coverage gap, caused by gubernatorial reluctance to expand coverage in GOP-governed states.
Since the Supreme Court made the Medicaid expansion part of the Affordable Care Act optional, more than one dozen GOP-controlled states still haven’t expanded coverage, due to a concern that they would shoulder the costs, even with assurances from the Obama Administration that 90 percent of their costs would be covered. In those states, the government is spending less than expected on Medicaid beneficiaries because they aren’t adding as many to the rolls.