Several readers asked us about Republican comments and news reports saying that a new Congressional Budget Office report had found that the federal health care law would cost double the original estimate. But that’s not what CBO’s report said. Instead, the report shows that the gross yearly costs of the new health care law are likely to be 8.6 percent higher than originally estimated.
Let’s start with the truth. In a
March 13 report, the CBO gave updated estimates for the cost of insurance coverage provisions of the law for the 2012-2021 period. It said the gross cost — not including revenue measures — would be slightly higher than it had estimated a year earlier,
in March 2011. The latest estimate puts the cost at $1.496 trillion over that decade, up by about $50 billion, which is a 3.5 percent increase.
The latest estimate of year-by-year costs is also higher than what was
originally estimated two years ago, when the bill was enacted. The latest estimate covers only eight of the years (2012 through 2019) that are in the original estimate. The total “gross” costs of that eight-year period are now estimated to be just over $1 trillion, or about 8.6 percent higher than originally projected.
But the CBO also projects that much of the new spending will be offset by penalties paid by employers who choose not to provide coverage to their workers, by penalties paid by individuals who opt not to obtain coverage, by taxing high-cost health plans and by other effects of the law’s coverage provisions. After accounting for these offsets, the “net” cost of the coverage provisions are now expected to be somewhat lower than projected two years ago. Comparing the eight years that are common to both estimates, the net cost is now predicted to be $772 billion, or about half a percent
lower than originally estimated.
Bookmarks