CBO: ObamaCare premiums and healthcare spending will rise by less than expected, because…

posted at 6:41 pm on April 15, 2014 by Erika Johnsen

The Congressional Budget Office released a report this morning that has received a lot of attention from ObamaCare’s many staunch media advocates because it essentially concludes that the cost of expanding coverage through the exchanges will be billions less than the CBO was predicting just a couple of months ago. That’s great news for the president’s crowning legislative achievement, right?

Health-insurance premiums for plans sold on the Affordable Care Act’s exchanges will be lower than previously expected, according to a report released Monday by the Congressional Budget Office.

The findings, by Congress’s nonpartisan spending analysts, result largely from the fact that insurance companies have redesigned plans on the government-run exchanges to shave costs. CBO found that individual policies on those marketplaces have narrower networks of doctors and lower reimbursement rates for health-care providers than is typical of employer-sponsored health plans.

As a result, CBO expects the federal government to spend about $165 billion less over the next decade on subsidizing health-insurance plans for lower earners than the office projected two months ago. Total spending on those subsidies is projected at $1.032 trillion between 2015 and 2024. The report was part of a broader federal spending update released Monday.

Did you catch that? Let’s go straight to the report for a closer look:

A crucial factor in the current revision was an analysis of  the characteristics of plans offered through the exchanges in 2014. Previously, CBO and JTC had expected that  those plans’ characteristics would closely resemble the characteristics of employment-based plans throughout the projection period. 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 lower exchange premiums and revisions to the other characteristics of insurance plans that are incorporated into CBO and JCT’s current estimates have small effects on the agencies’ projections of exchange enrollment. Although lower premiums will tend to increase enrollment, narrower networks and more tightly managed benefits will tend to reduce the attractiveness of plans and thereby decrease enrollment. The net effect on projected enrollment in the exchanges is small.

In a nutshell, the CBO initially made its projections under the assumption that the plans offered through the exchange would be largely similar in terms of benefits to the sorts of plans being offered by employers — but that definitely isn’t going to be the case. The narrowed networks that insurers are using to keep costs down and the lower reimbursement rates for doctors and hospitals are things that neither consumers nor providers tend to like in the long run — which will likely mean more strain on the system and higher costs further down the road.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

So, you expected premiums to go up after Obama and his minions said repeatedly they would go down 3000%..color me stunned…

fortcoins on April 15, 2014 at 6:45 PM

So all all this time, Obama has been running around calling cancelled plans “junk” when in actuality, it’s his exchange plans that are utter garbage/

Wendya on April 15, 2014 at 6:50 PM

I thought that the cost were going average about $2500 less, not “won’t increase as much as thought.” What happened to that?

Mimzey on April 15, 2014 at 6:52 PM

Remember just a few short months ago, when people were asking why they can’t keep the plans that they have and like? Good times! Those plans were made illegal by our jackass President and his retarded minions because they were “substandard”.

They are now being replaced by plans which are inferior by comparison to the plans which were “substandard”. Democrap math at work.

Jaibones on April 15, 2014 at 6:54 PM

Translation: We didn’t realize the plans would suck so bad. Therefore no one will want these crap plans. Hence less cost for government.

kevinkristy on April 15, 2014 at 6:54 PM

I thought that the cost were going average about $2500 less, not “won’t increase as much as thought.” What happened to that?
 
Mimzey on April 15, 2014 at 6:52 PM

 
You’re a racist, that’s what.

rogerb on April 15, 2014 at 6:57 PM

I absolutely detest that smiling id jot on the post title. The worst thing I hate about him is he gets away with all of his lies. I can’t stand his sneers and how he thinks he is god almighty himself. The Good Book says pride before the fall, but this guy is going forever on what he can get away with. I hope I gave enough clues on who I didn’t vote for.

garydt on April 15, 2014 at 6:58 PM

As a result, CBO expects the federal government to spend about $165 billion less over the next decade on subsidizing health-insurance plans for lower earners than the office projected two months ago.

 
In all seriousness, where is the estimate for the amount to be spent on free riders (which even our resident (D)s admit Obamacare does absolutely nothing to address) over the same period of time?

rogerb on April 15, 2014 at 7:03 PM

They get away with the lies because they own all the agencies and the government media. They’ll say what they are told. Even if I needed the job you couldn’t get me to lie for this bunch of criminals. I’d quit and tell all.

crankyoldlady on April 15, 2014 at 7:03 PM

It’s still a debacle even fake good news can’t make good news out of it…

sorrowen on April 15, 2014 at 7:08 PM

Thats what galls me too, is the demos own the media, Hollywood, the universities and everything else. The media should realize their heads are on the block whenever this despot decides they are not loyal enough. They are so stupid.

garydt on April 15, 2014 at 7:08 PM

saved or created

Murphy9 on April 15, 2014 at 7:09 PM

This is how government price controls work. Next comes the shortage.

trubble on April 15, 2014 at 7:17 PM

CBO

latin for “whatever the democrats want the number to be”

renalin on April 15, 2014 at 7:19 PM

You’re a racist, that’s what.

rogerb on April 15, 2014 at 6:57 PM

Caught me!..damn! Was it the white sheet and cone hat? :)

Mimzey on April 15, 2014 at 7:23 PM

Just remember all this is leading to single-payer. When there’s a SINGLE PAYER, the SINGLE PAYER alone determines reimbursement rates for doctors and other healthcare providers.

If you’re a doctor, and you don’t like what you get paid? Find another line of work. If you’re sick, and you need a doctor? Well… try prayer.

Marcola on April 15, 2014 at 7:23 PM

Shell game.

We lose.

portlandon on April 15, 2014 at 7:23 PM

Required to have insurance by law.

Exchange plans are ‘narrower’, have ‘narrower networks’, and ‘lower reimbursement rates’. (The providers and physicians who will settle for those ‘lower reimbursement rates’ are generally not to be found in the top tier of health care providers.)

No choice but to go outside the exchanges and buy insurance… at a premium.

The poor, who can’t afford to pay more for adequate health care insurance will be stuck with the cheaper insurance available on the exchanges.. which only allows for narrower networks, and providers willing to take the lower reimbursements, forced to make up for the deficiency of payment with quantity of patients served, and health care rendered, for the same dollar. Effectively… rationing.

thatsafactjack on April 15, 2014 at 7:24 PM

Doubtless they’re not counting the cost of all those new Medicaid signups — that money is being bled by some other non-DeathCare accounting section …

ShainS on April 15, 2014 at 7:25 PM

CBO

latin for “whatever the democrats want the number to be”

renalin on April 15, 2014 at 7:19 PM

Heh.

And all this time I thought it was Latin for “Barky in, Barky out” …

ShainS on April 15, 2014 at 7:27 PM

CBO

latin for “whatever the democrats want the number to be”

renalin on April 15, 2014 at 7:19 PM

Covering for Barack Obama

fogw on April 15, 2014 at 7:28 PM

Marcola on April 15, 2014 at 7:23 PM

… and if doctors and patients contract privately outside “the DeathCare-approved system”, that will be a criminal act by both parties — and the IRS will send you to jail …

ShainS on April 15, 2014 at 7:30 PM

Ironically, the obamacare plans only come as close as they do to their promised price (and it’s still not close by a long shot) by being “sub-standard” – the very same canard obama pulled out when he tried to discredit the existing plans most people were fairly satisfied with. There is not a trace of honesty in this administration, this law or its implementation.

paul1149 on April 15, 2014 at 7:31 PM

More shelter in place going on in Boston, drama at finish line. Two unattended backpacks

Murphy9 on April 15, 2014 at 7:41 PM

Let’s have them do another report come October when the new exchange opens and the rates double due to a percentage of people on them with pre-excisting conditions being to great to offset costs. You can also adjust the actual number of people enrolled down due to delinquent premiums. And because of all those delinquent policies expect medical costs to rise because of the hospitals and doctors are going to stuck with unpaid bills. And because of those medical costs rising expect premiums to up.

It’s a vicious circle baby.

lowandslow on April 15, 2014 at 7:49 PM

I think the fit has yet to hit the shan. People are going to find out soon that they can not afford to use their new affordable healthcare.

Blake on April 15, 2014 at 7:57 PM

It’s important to remember that the Congressional Budget Office is required to work only with the data it has been given. It is prohibited from gathering outside data.

bw222 on April 15, 2014 at 8:05 PM

It’s important to remember that the Congressional Budget Office is required to work only with the data it has been given. It is prohibited from gathering outside data.

bw222 on April 15, 2014 at 8:05 PM

Hear that Cummings and IRS? Wait. CBO check your back pockets, any Senators, Congress peeps in there?

31giddyup on April 15, 2014 at 8:09 PM

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.

Yep. Reimbursement rates for O-care plans coming in between Medicare and Medicaid. Really plays havoc with a doctor’s payer mix.

Over and under estimates on how long it will take people to start lying at the ER and saying they don’t have any insurance coverage because they can’t find a doctor who accepts O-care plans?

lineholder on April 15, 2014 at 8:13 PM

CBO: ObamaCare premiums and healthcare spending will rise by less than expected, because…

Alternative explanations…

because….. Comrade O’s Five Year Plan says it must be so.

because….. they rose far more than ‘expected’ in the past couple of years and are now leveling out.

because….. the CBO is using the latest ‘data’ the admin’s apparatchiks have cooked up, Chicago Style.

because…. they pushed out expected large increases to later years.

And soon and so forth.

It’s all BS. You can no longer believe or trust any numbers coming from the federal government. The socialists running our government are cooking the books and cranking out propaganda.

farsighted on April 15, 2014 at 8:19 PM

Does the CBO serve any actual purpose?

ctmom on April 15, 2014 at 8:23 PM

Does anyone out there actually believe any of this shlt?

GaltBlvnAtty on April 15, 2014 at 8:44 PM

I get it!

Eventually, the mandatory plans will cost almost nothing and will cover almost nothing.

However, you will be able to buy a secondary plan on the open market, which will give you decent doctors and decent coverage — but that won’t be mandatory (sort of like what they do with Medicare now).

Well end up back where we were before Obamacare.

Why didn’t we see this coming?

What comes after copper? Wood?

Pythagoras on April 16, 2014 at 12:15 AM

It’s like saying, “Hey, that Cadillac you wanted won’t be $45,000. No sir, it will be $19,000 but will not have AC, just an AM/FM radio, no regular size spare tire, missing would be anti-lock brakes, air bags, and seat belts. Oh, and we had to remove the automatic windows,the carpet, we took out the 3.8 L engine with 318 HP and replaced it with an engine that runs the Smart Car. How cool is that?! Enjoy your car, sucker.” Kinda like that

stop2think on April 16, 2014 at 8:32 AM

which will likely mean more strain on the system and higher costs further down the road.

Which means nothing to people who have been trained to want everything NOW. Get it while you can and who cares about the future. Anybody’s future.

Sterling Holobyte on April 16, 2014 at 9:43 AM