Health Reform WK-EDGE Baseline CBO/JCT coverage, subsidies estimates for age 65 and under adjusted
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Wednesday, December 20, 2017

Baseline CBO/JCT coverage, subsidies estimates for age 65 and under adjusted

By Kelly J. Rooney, J.D., M.P.H.

In estimating the numbers of people with certain types of health insurance coverage and the associated federal budgetary costs, the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) look to health insurance simulation models (HISIM), tax revenue projection models, actions and spending by states, projections of trends in early retirees’ coverage, and other available information. In a presentation at the Inforum Outlook Conference titled "An Overview of CBO’s Estimates of Federal Subsidies for Health Insurance for People Under Age 65: 2017 to 2027," Jessica Banthin, Deputy Assistant Director of Health, Retirement, and Long-Term Analysis Division looked at the CBO and JCT’s current 10-year projections on various estimates and the reasons for change since early 2016. All estimates are based on current law (CBO Presentation, December 7, 2017).

Projections. The presentation listed a number of estimates made by the CBO and JCT. Insurance coverage for people under the age of 65 through employers will decrease from 157 million people in 2018 to 151 million in 2027. Meanwhile, other coverage estimates will increase during that time for people under 65: Medicaid and the Children’s Health Insurance Program (CHIP) from 68 million to 73 million, nongroup coverage and the basic health program (BHP) from 17 million to 19 million, and Medicare from 8 million to 9 million, for example. Net federal subsidies associated with health insurance for people under age 65 are projected to be $1.150 trillion in 2027.

How projections have changed. New data has allowed the CBO to calibrate its models; update the HISIM for revised population projections, immigration estimates, and the latest macroeconomic forecast; and remodel state actions based on new information. In the March 2016 baseline, it was projected that enrollment of people made eligible through the Affordable Care Act (ACA) (P.L. 111-148) would increase to 15 million by 2027, but currently that projection is at 17 million. Higher-than-expected enrollment rates are due to increased awareness, easier application processes, and the effects of the ACA’s individual mandate. Subsidies for work-related coverage were projected at $302 billion in March 2016 and increased to $306 billion in September 2017, and Medicaid outlays for people made eligible under the ACA increased from $71 billion to $76 billion.

Estimates for nongroup coverage and the BHP were reduced from the March 2016 baseline of 26 million to 19 million. Nongroup coverage through the ACA’s marketplaces and the BHP are also lower (13 million) than the 2016 baseline (19 million). These reductions are due in part to consumers being less interested in marketplace plans, fewer advertising and enrollment efforts, and to enrollment being "relatively flat in the future." Subsidies through marketplaces are projected to fall from the initial $70 billion baseline in March 2016 to $62 billion per the September 2017 projections.

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