More good news for people who like bad news

Last week, I mentioned that the CBO will be issuing an updated projection for PPACA costs sometime next month. 

The Congressional Budget Office will take their new information on enrollment and run it through their model.  Their model will say that the subsidies for the first year of operation are higher than projected from the last run of the model in February.

The February projection assumed a $9 billion cost reduction mainly because a million people it had previously assumed would have signed up would not have signed up.  Oops!

Right now it looks like the extended open enrollment via the “blue box” method is bringing in even more people. 

ACASignups.net passes along the nugget that California has 500,000 in the extended enrollment (started but not completed) status.  Charles makes a soft projection of the national implications of that number:

if they were the only state which did this (which is what it sounds like), it suggests that instead of 20% of the total, that 500K is more likely perhaps 1/3 of the national total….

So…I really don’t know. My best guess at this point is that we may be looking at somewhere between 1.0 – 1.5 million additional exchange QHP enrollments during the 4/1 – 4/15 period.

So the CBO headline will not be that Obamacare costs $9 billion more than projected, but $13 or $15 or $20 billion dollars more than projected.  The CBO will probably not alter their out-year projections for total uptake as they’ll model the person that they assumed would have skipped out on 2014 enrollment but entered the Exchange in 2015 will have just entered a year “early”. 

The increase in cost will be due to two factors.  The first is increased subsidy costs.  80% of the people on the Exchange qualified for subsidy.  If that ratio holds, that means an additional 800,000 to 1,200,000 people will be getting monthly subsidies.  The second factor is that fewer people will be paying the mandate penalty.  The absolute lowest revenue loss would be $100 million dollars, probable revenue loss is $300 to $500 million dollars. 

Overall, increased costs and decreased revenue because more people than projected are getting covered is a very good thing, but it will produce another round of stupid ads and even dumber pundit bloviation.

12 replies
  1. 1
    c u n d gulag says:

    Conservatives POV:
    We’re spending THAT kind of money on people?
    PEOPLE?

    Why, that $20 million could be spent on another weapons system, part of which is built for the MIC, in our area!

    We’re taking away money from the military “Job Creators!”

  2. 2
    RosiesDad says:

    Richard:

    What is much more important than the cost of the subsidies is the overall cost of providing healthcare to the people who now have insurance who didn’t before. (Granted, this is likely much more difficult to quantify.)

    Bottom line: $20B spent on subsidies may very well save much more than that in actual medical spending.

  3. 3
    cmorenc says:

    @RosiesDad:

    Bottom line: $20B spent on subsidies may very well save much more than that in actual medical spending.

    But that kind of explanation, simple and sound though it is, doesn’t fit easily in a 30-second political ad or bumper sticker. Nor can you count on the MSM doing accurate explaining for you on that either.

  4. 4
    Baud says:

    The answer to anyone who complains about these costs is that Obamacare is far more popular than we expected.

  5. 5
    MomSense says:

    @Baud:

    There is so much I want to say about the way the costs are framed when it comes to Obamacare. In December I spent more for one visit to my doctor and the prescription than I now spend per month on my premium. A couple of visits to the doctor a month–as can happen frequently with kids during cold and flu season-and I am really screwed when it comes to my budget. So if I am able now to manage health costs and predict my health costs, that makes it possible for me to spend money in other ways which is good for the economy.

    Back when I could still afford insurance our premiums went up every month for not great coverage. When I finally couldn’t keep my insurance it was $1,600 per month. That is a hell of a lot to pay. I could have performed a lot of economic stimulus with some of that monthly premium.

    Health care costs had been rising precipitously every year especially on the self insured market but even for mid and large businesses, the costs were increasing every year. That isn’t good for business, consumers, or the economy as a whole. We are finally on a path to control health care costs. This is a good thing. The previous trajectory was unsustainable and left far too many people out.

  6. 6
    Patricia Kayden says:

    “but it will produce another round of stupid ads and even dumber pundit bloviation.”

    Stupid ads in an election year was a given regardless of the CBO’s report.

  7. 7
    Stella B. says:

    And that $20Bn is going to create a lot of jobs. Why are the conservatives always so envious of job creators?

  8. 8
    Mnemosyne says:

    Richard, are you keeping up on the Exchange news from Nevada? cckids posted a pretty horrifying story in the comments of one of yesterday’s posts.

    Short version: people signed up through the Nevada exchange, paid several months of premiums, and then discovered that Xerox (the Exchange tech vendor) never transmitted their information, so they have no insurance.

    I honestly don’t see how Xerox gets out of this without getting their pants sued off — one poor guy got billed $400,000 for his heart surgery and Xerox still can’t tell him who they sent his insurance premium money to after they deducted it from his bank account.

  9. 9
    feebog says:

    @MomSense:

    Damn! That was a great testimonial. I know there are millions of similar stories out there, but your story, right there, with those words is the 30 second ad that every Democrat running for congress should be using. Can I post that on my facebook page?

  10. 10
    Joel says:

    The second factor is that fewer people will be paying the mandate penalty.

    Literally, a victim of one’s own success.

  11. 11
    Three-nineteen says:

    The website never did work for me, so I finished my enrollment over the phone and have had Obamacare insurance since Jan 1. Apparently the website still thinks I haven’t completed my enrollment because they keep sending me emails telling me about all the deadlines. I wonder how many of the “started but not completed” enrollments are like me?

  12. 12
    Richard Mayhew says:

    @Mnemosyne: I’m aware of it on a superficial level but I have no special knowledge or expertise of it.

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