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Health Subsidies Will Cost More Than $1 Trillion by 2028: CBO

Yuval Rosenberg
Health Subsidies Will Cost More Than $1 Trillion by 2028: CBO

The Congressional Budget on Wednesday put out a new report looking on the health care market for Americans under age 65. Some key points:


The number of insured and uninsured: On average this year, about 244 million people under 65 will have health insurance, and about 29 million will not. But the number of uninsured is projected to rise by 3 million from 2018 to 2019, “mainly because the penalty associated with the individual mandate will be eliminated and premiums in the nongroup market will be higher.” Compared with its projections from September 2017, CBO now says that 5 million more people will be uninsured by 2027.


Federal subsidies: The government will spend $685 billion on subsidies for insured people this year, with that amount projected to climb to $1.2 trillion in 2028. Medicaid and the Children’s Health Insurance Program account for about 40 percent of the 2018 total, while tax benefits for employer-related insurance account for about 40 percent more. Projected total federal subsidies for health insurance from 2018 to 2027 have fallen by 5 percent, or $481 billion, compared with CBO’s September 2017 forecast. “The largest contributors to that decrease are a $389 billion decline in projected subsidies for work-related coverage and a $202 billion decline in projected spending for Medicaid and CHIP,” CBO says.

Affordable Care Act premiums are soaring: The average premium for a “benchmark” plan this year is about 34 percent higher than it was in 2017, and CBO expects those premiums to go up by about 15 percent next year. The agency projects that premiums for benchmark plans will then rise by an average of 7 percent a year from 2019 to 2028. “Insurance premiums tend to go up every year, but the magnitude of these increases stems largely from the repeal of the ACA's individual mandate, the expansion of skimpy short-term plans, and the decision last year to cut off the law's cost-sharing payments,” Axios’ Sam Baker notes.

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