Despite dire warnings that the Affordable Care Act will bankrupt the insurance industry and its policyholders, a
Congressional Budget Office report suggests premiums for private Obamacare plans will actually cost less than the non-partisan agency expected.
According to the report, the health law will cost $104 billion less through 2024. The premium for a “silver” level plan—the policy considered a benchmark for health reform—will average $4,400 in 2016. That’s 15% less than the CBO originally forecast in 2009.
Government payments to subsidize health plans are also expected to be lower than previously thought—roughly $1.032 trillion between 2015 and 2024. That’s $165 billion less than an estimate the CBO released in February.
The average size of a federal subsidy for each enrollee in 2015 will be $4,250 as opposed to $5,330, and $7,170 in 2024 instead of $8,370.
The CBO attributed the revised projections to changes in the health law, the Supreme Court decision not to require states to expand Medicaid, improvements to its own modeling methods and lower healthcare costs for the federal government and private health sector.
White House Press Secretary Jay Carney hailed the report as “welcome news.”
“It shows that marketplace healthcare costs have gone down, because premium estimates have gone down,” Carney told reporters Monday.
The lower premiums and government subsidies have the potential to either decrease or increase enrollment, and therefore producer profits, the report concluded.
“Although lower premiums will tend to increase enrollment, narrower networks and more tightly managed benefits will tend to reduce the attractiveness of plans and thereby decrease enrollment,” the CBO said.
The report stands in contrast to high initial premium hikes seen this year, as documented in a Morgan Stanley survey of insurance agents and brokers. According to the survey, premiums for individual health policies increased an average 12%—up to 100% in some cases.
Roughly 25 million people are expected to buy insurance plans through state and federal exchanges—one million more than the CBO forecast in February. The agency expects that number to remain steady through the next decade.
The CBO had previously forecast a policy-buying peak in 2018, which would then drop off to 24 million in the early 2020s.
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