CBO Cuts Estimates for Health Law’s Mandates

The Hill by Sam Baker –

May 14, 2013:

Unpopular taxes and mandates in President Obama’s healthcare law will be weaker than expected, the Congressional Budget Office (CBO) said Tuesday.

The CBO said fewer people will be affected by the law’s individual mandate, and fewer businesses will have to pay penalties for not offering health benefits to their employees.

Those mandates are among the most politically unpopular elements of the healthcare law. But if the penalties affect fewer people, they’ll also bring in less revenue to help the government pay for the health law’s coverage expansion.

The CBO released revised estimates Tuesday of the cost of the Affordable Care Act’s coverage provisions — a slice of policies that includes the new coverage options and certain coverage-related penalties, but not the wide array of taxes and savings that provide most of the law’s total deficit reduction.

The net cost of the coverage provisions rose by $40 billion over 10 years, compared with the budget office’s February estimates. The added cost is mostly a result of lower income from taxes and penalties.

The cost of expanding Medicaid and providing subsidies for private insurance fell by about $74 billion. Those policies will now cost the government roughly $1.8 trillion over 10 years, according to the CBO.

The budget office made only slight changes to the number of people it believes will gain access to healthcare coverage. It said Medicaid will cover about 1 million more people than previously estimated, while exchanges will cover about 1 million fewer people.

But while the gross costs of new coverage options fell, so did the revenues from certain penalties and taxes.

The CBO said, for example, that between 500,000 and 1 million fewer people will be subject to the law’s individual mandate, compared with the February estimates. That means penalties for being uninsured will bring in $7 billion less than expected.

The health law also includes a new tax on especially generous healthcare policies. But the budget office expects fewer employers to offer those policies, meaning the tax will bring in $58 million less than it estimated in February.

The CBO also cut by $10 billion the amount it expects employers to pay in penalties. The budget office said it now expects more people to gain or keep employer-based health coverage, meaning fewer businesses would have to pay a fine for their uninsured workers.

Source: John & Rusty Report via Choice Admin