CBO and the ACA – New Estimates of Costs and Employer Compliance

The CBO this week released a couple of updates to it’s budget scoring for the ACA.

New CBO Cost Estimates

For anyone who is not aware, the standard CBO process of estimating cost and budget impact for any proposed program is to estimate over a 10 year period. That is why there were many provisions in the ACA that started with premium collection in within the initial 10 year period, but did not start paying benefits until after the the initial 10 year period had expired. Using these budget games, the initial bill was scored at costing less than $1 trillion. Needless to say, that number is now over $1 trillion.

Peter Suderman on the Reason.com site has a good write up of the math involved and and where the true end number may end up for a full decade of the ACA. In addition, a quick review of the CBO note does not mention the effect of not implementing the CLASS Act. As we have discussed before, that program seems to have served a budgetary service only, and the refusal of the administration to agree to rescind it keeps it in the budget for now.

New CBO Estimates of Employment Based Health Insurance

The original CBO estimate was that about 3 million people getting insurance through their employer would end up migrating to Medicaid and the insurance exchanges. The CBO now estimates that number at 3 to 5 million. In reading the CBO report however, it is clear that this is all guess work at this point. Another interesting point in the report, is that it estimates that budgetary impact of more people losing their employer based coverage and being potentially subsidized through Medicaid or the insurance exchange is minimal. This is based on the assumption that most employers will raise taxable wages to the extent that they remove premium payments from the employee’s benefit package. That seems to be a rather large assumption. See Avik Roy, for a discussion of this.