Affordable Care Act Will Reduce Costs by $100 Billion Over the Next 10 Years


The Congressional Budget Office (CBO) expects that the insurance coverage provisions of the Patient Protection and Affordable Care Act will reduce costs by $100 billion over the next 10 years, and that the government will spend $1.35 trillion on healthcare through 2024 by expanding Medicaid and subsidizing insurance policies.

The CBO expects that 12 million Americans will purchase exchange policies in 2015 and 21 million Americans will purchase exchange policies in 2016, which are both fewer than previously estimated. The lower enrollment numbers means that the government will spend $39 billion less through 2024. Another reason for the reduction in costs is due to the unexpectedly high number of customers who enrolled in bronze plans (these plans cover 60% of medical costs). Customers with bronze plans are foregoing cost-sharing subsidies (that reduce out-of-pocket costs), but bronze plans are only available to customers who purchase a plan with an actuarial value of at least 70%. 15% of exchange customers who were eligible for subsidies (an eligible customer is a household with an income of up to 400% of the federal poverty threshold) opted for bronze plans, which means 3 million individuals will not take advantage of cost-sharing subsidies. Another reason for the reduced costs is due to the overall decline in healthcare spending since the passage of the law. The CBO has reduced projected costs on Medicaid spending from 10% to 15% for 2014.

Despite the reduction in anticipated costs, there has been unexpectedly high enrollment in Medicaid and the Children's Health Insurance Program. The CBO believes that the Affordable Care Act has caused 8 million more Americans to enroll than would have otherwise. The spending on these programs is expected to be $60 billion higher than the original projected cost through 2024.

The CBO anticipates that 36 million Americans will lack health insurance in 2015, and it is believed that this number is 19 million Americans less than if the Affordable Care Act did not exist. By 2025, it is estimated that only 29 to 31 million non-elderly Americans will be uninsured. 30% of these are expected to be unauthorized immigrants, and 40% will be those who forego coverage even though they have access.

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