CBO: Healthcare reform will cost $100B less than expected

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Health insurance premiums will be lower than expected for the next few years. Therefore, the Congressional Budget Office revised its estimated cost of the Affordable Care Act to $1.4 trillion over the next 10 years--a decrease of about $100 billion.

In its report published Monday, the CBO said premiums will fall because so many insurers are using narrow networks and lower reimbursement rates for plans sold on health insurance exchanges.

"A crucial factor in the current revision was an analysis of the characteristics of plans offered through the exchanges in 2014," the report states. "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 healthcare than employment-based plans do."

By lowering the costs of exchange plans, the federal government will spend less on subsidies for eligible consumers buying those plans. In fact, the CBO lowered its subsidy estimate by $300 per enrollee from what it projected in February.

The CBO now expects 24 million people will buy coverage through an exchange plan in 2016. A few months earlier, the nonpartisan CBO predicted exchange enrollment would reach 22 million people by 2016, FierceHealthPayer previously reported.

That means the CBO believes the ACA will have helped 26 million people obtain health insurance by 2024.

The White House praised the CBO's estimates. "This report demonstrates the Affordable Care Act is working," White House spokesman Jay Carney said at a news briefing, Reuters reported. "It shows that marketplace healthcare costs have gone down because premium estimates have gone down."

To learn more:
- here's the CBO report (.pdf)
- read the Reuters article

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