CBO report will of­fer de­tails on fed­eral health­care costs

Modern Healthcare - - THE WEEK AHEAD - —Bob Herman

The Con­gres­sional Bud­get Of­fice’s an­nual up­date on the fed­eral bal­ance sheet ar­rives Monday, and it ap­pears spend­ing on Medi­care, Med­i­caid and the Af­ford­able Care Act is contributing to a spike in the deficit.

It’s an abrupt change. The yearly fi­nan­cial short­falls had been drop­ping ev­ery year since 2009. As re­cently as last Au­gust, the CBO ex­pected the gulf be­tween taxes and ex­penses to con­tinue nar­row­ing in the near term.

But the non­par­ti­san fed­eral bud­get agency at­trib­uted most of the coun­try’s $544 bil­lion pro­jected deficit in 2016 to the year-end bud­get deal that re­duced cor­po­rate and in­di­vid­ual taxes. Fur­ther, manda­tory ex­penses will be $168 bil­lion higher this year than last, ac­cord­ing to a CBO sum­mary re­leased last week. Health­care ex­penses, in­clud­ing the ACA’s in­sur­ance sub­si­dies, rep­re­sent 62% of that in­crease.

The CBO will pro­vide more de­tails on the coun­try’s fis­cal sit­u­a­tion this week, and may elab­o­rate fur­ther on the costs of the ACA. Last Jan­uary, the CBO es­ti­mated the health in­sur­ance pro­vi­sions of the law—in­clud­ing the pre­mium and cost-shar­ing sub­si­dies, as well as Med­i­caid ex­pan­sion—would cost $100 bil­lion less over the next decade than pre­vi­ously pro­jected.

Sev­eral fac­tors played into the down­ward re­vi­sion. For ex­am­ple, many ex­change shop­pers have skipped out on cost-shar­ing sub­si­dies be­cause they are en­rolling in cheaper bronze plans. But the CBO will likely re­visit those as­sump­tions.

“Some en­rollees will switch from bronze plans to sil­ver plans be­cause they in­cur large med­i­cal bills or be­come con­cerned (per­haps be­cause of out­reach ef­forts by in­sur­ers or oth­ers) about the pos­si­bil­ity of in­cur­ring large out-of­pocket pay­ments,” the CBO anal­y­sis noted last year.

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