Does the New CBO Report Help or Hurt ObamaCare?

Depending on which news outlet you read yesterday, the impact of the new Congressional Budget Office report on the Patient Protection and Affordable Care Act could range from damning ("Devastating News for ObamaCare: Over 2 Million Will Lose Jobs," FOX News) to the slightly less apocalyptic ("No, CBO Did Not Say ObamaCare Will Kill 2 Million Jobs," Washington Post) to the positively rosy ("Why the New CBO Report on Obamacare is Good News," Los Angeles Times).

Just what does the report CBO say, and does it hurt or help ObamaCare?

The Good
Government to bring in $8 billion from risk corridors program. The controversial risk corridors program — which has been referred to as a "bailout" program by its opponents — will actually bring in revenue. Under the program, which is intended to stabilize the insurance market, the federal government will pay health insurers a total of $8 billion and collect $16 billion, yielding $8 billion in savings.

Yet, CBO Director Doug Elmendorf told The Hill, the finding "does not mean that repealing the risk corridor program would cost the government $8 billion," clarifying that the budget impact of a repeal hadn't been fully examined. Earlier this week, House Republicans toyed with pushing for a repeal of the risk corridor program in exchange for a debt ceiling deal.

The Good-ish*
Insurance provisions will cost less. The CBO says the cost of the insurance provisions within the law (primarily, the cost of exchange subsidies and coverage costs for new Medicaid enrollees) will be $9 billion less than previous estimates. According to Helen Adamopoulos who broke down the report for Becker's Hospital Review, "The CBO and JCT now estimate about 1 million fewer people will get coverage through the exchanges this year than previously estimated, and about 1 million fewer people will enroll in Medicaid and CHIP, primarily because of the technical problems that have plagued the rollout of the exchanges."

*Caveat: While the cost to the government is less — a good thing for those who want to control government spending — fewer enrollees because of the rollout fiasco isn't a good thing for those who support the law. According to the report, 2 million fewer people than expected will enroll in coverage this year, which of course means less outlay for subsidies and Medicaid spending. But, for hospitals, this means fewer insured patients that initially expected. And back to those concerned with government spending: The insurance provisions, while now $9 billion less, will still cost the government $41 billion in 2014 and $1.49 trillion from 2015 to 2024.

The Bad-ish*
Fewer hours worked. The PPACA will reduce the total number of hours worked by 1.5 percent to 2 percent from 2017 to 2024, which equates to a decline in the number of full-time-equivalent workers of about 2 million in 2017, rising to 2.5 million in 2024.

Fewer hours worked isn't exactly a boon for the economy, but despite previous reports suggesting 2.5 million jobs will be lost, this isn't really the case.

Instead, the report says workers will choose to supply less labor because of the law. For some workers, more affordable coverage means they can work fewer hours.

*Caveat: The fact that workers have more flexibility about hours works could be a good thing for many working families. Consider these scenarios:


  • A full-time worker who now works 40 hours a week, may cut her hours to 30 and still receive employer sponsored-coverage under the law (Employees who work 30+ hours/week are considered full-time workers under the PPACA).

  • A full-time worker who now works 40 hours a week, may cut her hours to 20 or 15. While she may not be eligible for employer-sponsored coverage, she can receive more affordable coverage on the exchange (and may receive a tax subsidy for it). 

As economist Dean Baker told the LA Timesthe law will benefit "older workers with serious health conditions who are working now because this is the only way to get health insurance. And (one for the family-values crowd) many young mothers who return to work earlier than they would like because they need health insurance. This is a huge plus."

Other key findings of the CBO worth noting:

  • Projected exchange enrollment down from 7 million to 6 million for 2014.

  • Projected enrollment in Medicaid and CHIP down from 9 million to 8 million for 2014.

  • Projected number of uninsured increased by 1 million for 2014.

  • Net impact of employment-based coverage stayed the same.

So, while the initial reports may have suggested another further plight for the Patient Protection and Affordable Care Act, a closer look suggests that while the law hasn't reached its intended coverage numbers, it's impact on our budget deficit is less then when the law was passed by Congress and it may provider certain current full-time workers more flexibility in their decisions about if and how much to work.

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