Obamacare will be cheaper than initially predicted because the plans health insurers are offering through the exchanges are not as generous as those most Americans get through their jobs, according to a new analysis Monday by the Congressional Budget Office.
Subsidized plans are narrower and manage patients' health care more tightly, which means premiums can be kept lower — and the government won't have to pay as much in subsidies, the CBO and a sister agency, the Joint Committee on Taxation, said.
"Previously, CBO and JCT had expected that those plans' characteristics would closely resemble the characteristics of employment-based plans throughout the projection period," the agencies concluded. "However, the plans being offered through the exchanges this year appear to have, in general, lower payment rates for providers, narrower networks of providers, and tighter management of their subscribers' use of health care than employment-based plans do."
The nonpartisan scorekeepers said the Affordable Care Act will mean 12 million more people will have insurance coverage this year, and 26 million more will have coverage by 2017.
Those are big improvements, but they will still leave 11 percent of people without insurance, the agency said.
Thanks to the less generous plans being offered right now, those taking part in the exchange will get, on average, $4,410 in subsidies, which nearly $300 less than the CBO predicted in February. And by the end of this decade, those on the exchange will get $1,200 less, on average.
The CBO also said the continued economic slump will hurt wages, which will be as much as 5 percent lower than previously projected at the end of this decade. That means more people will be in Medicaid, which is the government's health program for the poor, and fewer people will be buying plans on the exchanges.
Powered in part by those lower costs, the government will now run a deficit of less than $500 billion this year, the CBO said in a second report released Monday. That will be the first time the deficit has dropped below that mark since fiscal 2009, which began just as the Wall Street collapse was beginning to harm the economy.
The latest update to the CBO's projections found improvements nearly across the board. Social Security payments over the next decade are $11 billion lower, while Medicare payments are down by $98 billion, or a full 1.4 percent.
But Medicaid spending will rise by about $29 billion.
The Affordable Care Act alone will cost $36 billion less this year, and $104 billion less from 2015 through 2024, totaling $1.383 trillion now, the CBO said.
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