Estimates on federal spending for healthcare reform continue to decrease.
A new projection from the Congressional Budget Office suggests that the actual amount the federal government will pay for insurance premium subsidies will be $142 billion less over the next 10 years. That’s primarily due to an expected slowdown in rising premium costs, the CBO said.
In this new, more moderate phase of premium pricing, health insurance costs are expected to continue to increase—but slowly. Health spending in 2013 great at the lowest rate since government officials began tracking it in 1960, and represents the fourth consecutive year that health spending has kept in pace with grown in the overall economy.
White House spokesman Josh Earnest said the news is just the latest in “a long line of data points that indicate the Affordable Care Act is contributing in a very positive way to holding down the growth of healthcare costs in the country.”
A New York Times report suggests insurance companies may also be contributing to the slowdown of cost increase, as many have introduced products that charge customers higher deductibles and co-pays or limit the number of covered doctors and care facilities.
More efficient care may also be leading to the slowdown.
Whatever the combination of factors, it means that despite watching consumer premiums increase with the onset of the ACA, insurance agents may expect a gradual slowdown in costs in the near future.
Of course, all of these projections could be derailed if the Supreme Court strikes down subsidies in the 34 states currently relying on HealthCare.gov to shop for policies.
Analysts have warned that if this happens, the tax credits provided to residents in affected states would be gutted and millions of Americans would go uninsured. The employer mandate, too, would be rendered toothless and HHS data suggests that agents and consumers could expect an immediate, 322% increase in premiums.
Insurance actuaries have already suggested that if subsidies are cut, carriers would seek permission to raise premium prices significantly.
“If the federal premium tax credits are no longer available to eligible enrollees…enrollment could decline precipitously,” the American Academy of Actuaries warned in a letter to HHS Secretary Sylvia Burwell. “Moreover, individuals with high-cost healthcare needs would be more likely to remain enrolled, while those with low-cost healthcare needs would be more likely to exit the market.”
Without raising rates, “insurer solvency could be threatened,” the actuaries concluded.
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