Latest CBO update — more covered at lower costs

 I expected the post Open Enrollment CBO estimates for coverage costs to show a significant increase over their February estimates:

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. 

I was really, really wrong!

The new CBO report just was released and here are the highlights:

Relative to their previous projections made in February 2014, CBO and JCT now estimate that the ACA’s coverage provisions will result in lower net costs to the federal government: The agencies currently project a net cost of $36 billion for 2014, $5 billion less than the previous projection for the year; and $1,383 billion for the 2015–2024 period, $104 billion less than the previous projections (see the figure below).

. As time has passed, the period spanned by the estimates has changed. But a year-by-year comparison shows that CBO and JCT’s estimates of the net budgetary impact of the ACA’s insurance coverage provisions have decreased, on balance, over the past four years (see the figure below). That net downward revision is attributable to many factors, including changes in law, revisions to CBO’s economic projections, judicial decisions, administrative actions, new data, numerous improvements in CBO and JCT’s modeling, and lower projected health care costs for both the federal government and the private sector.

CBO Cost projections of PPACA 2014-04-14

CBO Cost projections of PPACA 2014-04-14


It’s almost like this thing is going to work at both increasing coverage and flattening the growth curve of healthcare spending.

79 replies
  1. 1
    satby says:

    ahh, but the opposition will claim the data is skewed!

    Edited to add: in reality, this is great news!

  2. 2
    Roger Moore says:

    Unpossible! We all know Obamacare is on the brink of collapse. Fox News told me so.

  3. 3
    MomSense says:

    Ok, but is part of the reason for the less than projected net cost to the Fed. govt. the fewer than projected Medicaid enrollees?

    ETA Also, too great news on lower costs!

  4. 4
    Richard Mayhew says:

    @MomSense: that is true for the March 2010 to Present comparison but it is not relevant for the May 2013 to present comparison. In both cases, Medicaid expansion as voluntary choice by the states was a known known and by April 2013, it was pretty clear which states were taking free money and which states are run by sociopaths and sadists.

  5. 5
    PaulW says:

    So you’re saying Obamacare is broken and we need to repeal it and replace it with nothing, just as the Republican’t Party insists should be done, over and over again while the nation burns…

  6. 6
    MomSense says:

    @Richard Mayhew:

    Thanks for the explanation.

  7. 7
    qwerty42 says:

    …increasing coverage and flattening the growth curve of healthcare spending.

    Thanks, Obama!

  8. 8
    Just One More Canuck says:

    @Roger Moore: and mclaren too

  9. 9
    piratedan says:

    well it’s painfully obvious that you folks are all terribly wrong, these ads tell me so….


  10. 10
    Mandalay says:

    Speaking of the CBO, and only slightly OT, The U.S. deficit will fall to $492 billion this year, according to the Congressional Budget Office, down from $680 billion in fiscal year 2013.

    “This will be the fifth consecutive year in which the deficit has declined as a share of GDP since peaking at 9.8 percent in 2009,” CBO said.

    Hmmm. What’s so different about the last five years?….

  11. 11

    It is reassuring to know that Obamacare works as intended, even a little better. I particularly like to see the healthcare cost curve flattening, since I always felt the piles of new regulations were the overlooked centerpiece of the bill. Thank you for giving us this information, because it is hard to get.

    Unfortunately, it’s hard to get because hardly anyone cares. Politically, how much Obamacare costs is a secondary or tertiary issue. One side wants to help people. One side wants to hurt people. That’s pretty much it.

  12. 12
    burnspbesq says:

    @Just One More Canuck:

    Fox News is far more likely to be correct than mclaren.

  13. 13
    burnspbesq says:


    What’s so different about the last five years?

    That’s obvious: the heroic Republican majority in the House has kept the Kenyan yoosurper from breaking the bank.

  14. 14

    Ah, ‘3-4 permanent, unwinnable wars’ Mclaren. On the right side philosophically, but addicted to every whacked out conspiracy theory out there. The world must be a terrifying place if you believe all that stuff is true.

  15. 15
    Roger Moore says:


    What’s so different about the last five years?

    The economy has been gradually recovering.

  16. 16
    Villago Delenda Est says:

    The GOP assures me that the CBO is lying about all these numbers, so no doubt the Death Panels have me in their sights.

  17. 17
    Villago Delenda Est says:


    Hmmm. What’s so different about the last five years?….

    Borrow and spend like a poet on payday warmongers no longer in power, perhaps?

  18. 18
    Belafon says:

    @Roger Moore: Luckily Herbert Hoover left office in early 2009 before he could do any more damage this time.

  19. 19
    burnspbesq says:


    There’s a corollary to Camus’ famous line, “One must imagine Sisyphus happy.”

    One must also imagine that Chicken Little sees herself as a heroine.

  20. 20
    rikyrah says:

    you really rock, keeping us up to date and informed.

  21. 21
    MomSense says:


    O/T but wanted to thank you for your book! We had a crappy, rainy day yesterday but my little guy spent it curled up on the couch reading your book. I think he is almost done which means I get to read it soon!

  22. 22
    Soonergrunt says:

    @burnspbesq: A fresh cat turd is more likely to be correct than mclaren. Far less likely to be mentally ill, too. Probably smells better than anything produced by mclaren as well.

  23. 23
    catclub says:

    @Mandalay: “What’s so different about the last five years?…. ”

    Horrible job growth?

  24. 24
    catclub says:

    @Belafon: Herbert Hoover did good work in the 1927 floods.
    GWB mainly ruined companies that he got from his father’s connections.

  25. 25
    pluege says:

    It’s almost like this thing is going to work at both increasing coverage and flattening the growth curve of healthcare spending.

    too bad the corporate media will make sure Americans won’t know about it.

  26. 26

    I love that it is selling well. I love that people are enjoying it. The thought that thousands of people have already read my stories and liked them warms my heart. I hope you enjoy it, too!

    Funniest story from the process so far: I got my first (and only) two star review deploring the terrible moral lesson of a little girl choosing to be a supervillain. Like sixty seconds later I got a five star review praising the deep moral message and saying he was going to bodily force his wife and daughter to read it.

  27. 27
    rikyrah says:

    @Richard Mayhew:

    In both cases, Medicaid expansion as voluntary choice by the states was a known known and by April 2013, it was pretty clear which states were taking free money and which states are run by sociopaths and sadists.


  28. 28
    Mike E says:

    Umm, Betelgeuse, you guys.

  29. 29
    NorthLeft12 says:

    @Mandalay: The Republicans have been the majority in the House and have been steadfastly fighting against the spendthrift Liberals to ensure that your tax dollars are spent wisely?

    HAHAHAHAHAHAHA! I could not resist. If only I knew what the sarcasm font was.

  30. 30
    Mandalay says:


    too bad the corporate media will make sure Americans won’t know about it.

    Well yes and no. If you go to Google News for their US section the ACA is on their list of the top twenty stories.

    OTOH, the “fair and balanced” headline that google chose to show is three days old, and taken from Sean Hannity’s web site on FoxNews.

    Its title? How the ObamaCare cloud will hang over Dems in 2014.

    Your liberal media at work right there. Guck foogle.

  31. 31
    rikyrah says:

    Brian Beutler: Democrats Need to Start Blaming the GOP for the Death of Charlene Dill

    How liberals should talk about the Medicaid expansion

    On Wednesday, the Orlando Weekly published the explosive and infuriating story of Charlene Dill, a struggling, 32 year old mother of three who collapsed and died on a stranger’s floor late last month. According to Weekly reporter Billy Manes, Dill suffered from a treatable heart condition. She also fell into what policy experts call the Medicaid coverage gap — a hole the Supreme Court punctured in the health safety net when seven of its justices rendered the Affordable Care Act’s Medicaid expansion entirely voluntary.

    Over 20 Republican state governments have ripped that hole wide open by refusing billions of federal dollars, offered on the sole condition that they be used to insure residents who earn less than 138 percent of the federal poverty level. In their states, residents who weren’t previously eligible for Medicaid, but currently earn too little to qualify for subsidies to purchase private insurance, are out of luck. Experts estimate that five million people nationwide have fallen into the gap. Nearly a million of those people reside in Florida alone — collateral damage in the GOP’s war against Obamacare. Dill was one of those people. She was selling a vacuum cleaner to earn the money she needed to buy her heart medication when she collapsed.

  32. 32
    Roger Moore says:


    O/T but wanted to thank you for your book!

    This. I stayed up too late last night finishing it myself. It’s a lot of fun, and in a well run world would have studios nosing about asking about movie rights.

  33. 33
    Just One More Canuck says:

    @Mike E: Sorry I didn’t mean to send up the loon signal

  34. 34
    JoyfulA says:

    My orthopedic surgeon told me the hospitals are insisting that all orthopedic surgeons who operate at a hospital agree on a standard protocol that all will use. At the first meeting of 13 orthopedic surgeons, 13 standard protocols were proposed.

    Is this strictly a quality measure, or is bending the cost curve involved, too?

  35. 35
    Fair Economist says:

    We already knew it would flatten the curve and improve coverage. We’ve already seen that. This indicates it’s flattening the curve far more than expected. Most likely this boils down to the estimators being conservative about the benefits in the earlier estimates, which is both a reasonable and expected bias under the circumstances.

    I’m assuming, along with many others, that we’re seeing some pent-up demand being addressed here. It will be interesting if that’s actually the case and we see further unexpected improvements in the future as the new enrollees’ demand for care drops.

  36. 36
    Mary G says:

    This is good news for John McCain!

  37. 37
    Roger Moore says:


    A fresh cat turd is more likely to be correct than mclaren.

    I’ve never encountered a cat turd that was able to express something that could be categorized as correct or incorrect. That still puts them ahead of mclaren in the overall accuracy department, but more in terms of lack of incorrect responses than presence of correct ones.

  38. 38
    Violet says:

    @Mary G: OT–missed your garden thread yesterday and wanted to say how much I’ve enjoyed them! Sorry about the stolen plants and coke box. That stinks.

  39. 39
    Ash Can says:

    @Mike E: Has you-know-who ever actually showed up on any of Richard Mayhew’s threads?

  40. 40
    Chris says:


    Brian Beutler: Democrats Need to Start Blaming the GOP for the Death of Charlene Dill

    Yes. They should…

    And fuck the Supreme Court, corrupt bought-and-paid-for POS that it is.

  41. 41
    another Holocene human says:

    @JoyfulA: Both, I mean the less patients you fuck up, the less lawsuits and federal audits.

  42. 42
    patroclus says:

    Another way of looking at it is that the insurance industry has, more or less, been virtually completely unregulated since the passage of McCarran-Ferguson in 1944, which pre-empted all federal regulation of insurance and left it to the hodgepodge of state regulation, which allowed out-of-state and offshore owndership of operating insurance companies which were effectively impervious to regulation. Insurance from 1944-2010 was a wild west market where the companies could do whatever they could get away with, including unwarranted rate increases, higher costs for virtually everything, bankruptcies to avoid judgments and normal market responsibility, wildly inflated administrative costs etc… Now, after the passage of the ACA, the industry is, like others, highly regulated, watched and overseen, and it is beginning to behave professionally, rather than like vulture capitalists.

    With more and more people in the system, the system will continue to behave better. The cost curve will bend more, the percentage of uninsured will go down. All of this will make the country’s fiscal position much better, because so much expenditure is related to health. All of this was foreseeable and is not surprising. The end of the McCarran-Ferguson regime will be highly beneficial to the nation.

  43. 43
    MomSense says:


    He spent about 3-4 hours just reading without a break so I take that as he likes it! I can’t wait to have my turn.

  44. 44
    PaulW says:

    @Mike E:

    Umm, Betelgeuse, you guys.

    What? It finally went nova?

  45. 45
    MomSense says:

    @Roger Moore:

    Now I double dog can’t wait to read it!

  46. 46
    Richard Mayhew says:

    @JoyfulA: 3 things.

    1) Cost control — if there is a standard protocal and standard implants/screws/rods etc, the hospital has a chance to buy in bulk.

    2) Legal liability limitation — most liability cases can be defended if the doc in question followed locally acceptable protocals. Since there are 13 proposed standards, establishing a locally acceptable protocal defense means lots of billable hours for the lawyers. Actually writing things down as an actual standard reduces legal billable hours as it makes establishing the defense or deciding to settle a whole lot easier.

    3) quality — plenty of evidence showing that check lists reduces decision making stress which reduces errors.

  47. 47
    Cacti says:

    O/T but awesome.

    House Armed Services Committee Chair, Buck McCeon (R-CA), concludes inquiry into Benghazi attacks and finds it was a whole lotta nuthin’:

    Money quote:

    “I think I’ve pretty well been satisfied that given where the troops were, how quickly the thing all happened and how quickly it dissipated, we probably couldn’t have done more than we did.”

    Share that with any GOPer acquaintance the next time they shout “BENGHAZI!”.

  48. 48
    Rob in CT says:

    @Ash Can:

    I recall a really strange rant in one of the Mayhew threads about how the evil 1%er CEO Mayhew was lying to you all. Pretty sure it was a mclaren post.

  49. 49
    Mike E says:

    @PaulW: Well, it has been quite warm in these parts…

  50. 50
    Chris says:


    Clearly a RINO who’s in on the conspiracy. Besides, he’s from California.



  51. 51
    Anoniminous says:

    Thank you for these threads.

  52. 52
    Matt McIrvin says:

    I’d heard recently that according to the RAND study, an unexpectedly large portion of the gain in insured under the ACA actually comes from more people being covered by employer-sponsored plans, probably because of some combination of the law’s mandates and the other new regulations that have been put in place since 2010.

    Could that also be reducing the cost to the federal government?

  53. 53
    Roger Moore says:

    @Ash Can:

    Has you-know-who ever actually showed up on any of Richard Mayhew’s threads?

    Yes. She seems to have fixated on him, claiming he owns his own insurance company. I guess she’s incapable of understanding that “Mayhew Insurance” is a term he uses to disguise his employer, not as a way of literally claiming to own his own company. Stupid troll is stupid.

  54. 54
    Citizen_X says:

    @PaulW: Just don’t say “Betelgeuse” three times in front of a mirror, because then the star will teleport into your bathroom.

  55. 55
    Amir Khalid says:

    @Rob in CT:
    From time to time Richard uses a hypothetical health insurer he calls “Mayhew Insurance” to explain a point, so mclaren has got the idea that Richard is a billionaire insurance company founder and CEO, who for some reason has a second job as a soccer referee. I wish I had mclaren’s vivid imagination.

  56. 56
    Roger Moore says:

    @Amir Khalid:

    I wish I had mclaren’s vivid imagination.

    I’m not sure if “vivid imagination” is the correct way of describing somebody who listens to voices nobody else can hear.

  57. 57
    burnspbesq says:


    That may accurately describe some states, but it sure as shit isn’t accurate across the board. The California Insurance Department has generally been quite good. I express no opinion as to whether the fact that the Insurance Commissioner is elected rather than appointed has anything to do with it.

    The canard that state regulation is inherently inferior to federal regulation is just that – a duck.

  58. 58
    burnspbesq says:

    @Amir Khalid:

    Even if you had mclaren’s imagination, you couldn’t have envisioned Kompany handing the game-winning opportunity to Coutinho neatly gift-wrapped with a big bow on it.

  59. 59
    JoyfulA says:

    @JoyfulA: Thanks. I’m glad my orthopedic surgeon is finding this a good thing and even humorous. He is renowned among hospital staff as exceedingly cautious and giving them extra work, but I like a surgeon who won’t operate if the patient hasn’t signed in magic marker the joint to be repaired.

    After my follow-up appointment next year, I’ll let you know how things turn out. We have a new full-service hospital opening next month, which could complicate things.

  60. 60
    patrick II says:

    Does anyone know why employer-based insurance policies have increased by 7 million this year? I assume it has something to do with the ACA, but I must have missed it.

  61. 61
    Mandalay says:

    @patrick II:

    Does anyone know why employer-based insurance policies have increased by 7 million this year?

    Since everyone is now required to have medical insurance, I assume that a good chunk of that number is for young people who had chosen in the past to not participate in their employer’s medical plan (or any other health plan).

    And since an employer’s medical plan(s) will usually be far cheaper than anything you can obtain on your own the enrollment numbers soared.

  62. 62
    The Pale Scot says:

    Can anybody clarify?

    Can you enroll during the day of 4/15 or is the end at 12 midnight tonite? (at the start of 4/15)

    Extension is granted all ready

  63. 63
    Richard Mayhew says:

    @Matt McIrvin: I want to see a follow-up from Rand as that is an odd result that is not in agreement with a couple of other surveys plus other data sources. If there is follow-up in May that replicates Rand’s March result, great, if not, it is an oddity and that is all.

    If there is greater number of people getting insurance through work, here are the direct effects. Fewer people need to go on the Exchanges therefore there are fewer people getting subsidies. This costs the government less.

    However revenue changes as well.

    Firms are paying smaller/fewer employee mandate penalties, employees are paying fewer individual mandate penalties (some % of people w/o employer health care will fall through the cracks or elect to not get insured), and more employer labor compensation costs are tax sheltered as it is being paid out as insurance instead of cash.

    CBO sees the fewer subsidies paid to be greater than the revenue loss, so it is a deficit reducer, but not 1:1.

  64. 64
    Richard Mayhew says:

    @The Pale Scot: are you on
    If so, apply as soon as you are ready, but there was no firm deadline.

  65. 65
    Mnemosyne says:

    @patrick II:

    As I understand it, some really big companies (like WalMart and Disney) looked at how their health insurance was set up after re-jiggering it to meet the requirements of Obamacare and decided that it would be less trouble and expense to cover those employees themselves rather than pay a penalty. I know that Disney is self-insured (i.e. they pay all the claims but have insurance companies do the administration) and I’m assuming WalMart does the same thing since they’re so huge.

  66. 66
    Ruckus says:

    @patrick II:
    People may be actually looking at the costs rather than taking news reports at face value. This could hold true for both business owners and employees. Also it may be that employer group health insurance has had a slowing in pricing increase due to the ACA. And not all business owners are complete assholes. Some of them actually try to enhance their employee’s lives, rather than suck that life out of them.

  67. 67
    Mandalay says:


    Some of them actually try to enhance their employee’s lives, rather than suck that life out of them.

    OTOH, I have heard people say that they can’t afford to change jobs because of the medical insurance they get from their employer. That is not to disparage the employers; they are simply conforming to the absurd rules foisted on them.

    You’d think Republicans would be all over a single payer system because it really would free up the labor market – any reluctance to change jobs because of medical insurance would disappear.

  68. 68
    Chris T. says:

    @Roger Moore:

    I’m not sure if “vivid imagination” is the correct way of describing somebody who listens to voices nobody else can hear.

    Hmm … “inspired receiver”? “phantasmagorical auditionary”?

  69. 69
    Richard Mayhew says:

    @Mandalay: That is only if you believe the Republican party is Economic Efficiency uber alles instead of using social and economic levers of coercian to fellate TRUE AMERICANS (TM)

  70. 70
    Baud says:

    Good news. Thanks, Richard.

  71. 71
    rikyrah says:

    The Right’s New Scam: Feigning Anger on Behalf of People They Encouraged to Skip Obamacare
    BY BRIAN BEUTLER @brianbeutler

    Beginning last summer, and continuing unabated until a few weeks ago, conservatives undertook a variety of efforts (both subtle and explicit) to discourage people, particularly young people, from enrolling in ACA-compliant health plans.

    The idea was to deny state-based insurance markets critical mass, and sound risk pools, and send them into actuarial death spirals. In almost every instance, conservatives were appealing to strangers to undertake considerable personal risk in service of dubious ideological principles.

    Though these efforts failed to achieve the larger goal, they almost certainly succeeded at convincing some people to skip Obamacare. And when confronted about the recklessness of their strategy, the most unscrupulous conservatives would say, No biggie! Obamacare allows people to enroll after they get sick or injured. So there’s no risk at all.

    This was a lie. And if it weren’t such a dangerous lie, I’d be amused to find that conservatives now want you to be outraged about the fact that the Affordable Care Act creates limited open-enrollment periods each year to prohibit precisely that kind of free riding.

  72. 72
    The Pale Scot says:

    @Richard Mayhew:
    Yes, I am. I’m in Florida and getting a functioning ID with a functioning application took over 6 weeks. Apparently my credit history is obsolete/non-existent and it created chaos, I didn’t help matters by losing the name and password of my first account and by paying cash for everything. (I canceled my credit cards in 2005, chose to live like a German) Anyway I finally was able to shop on last Thursday and have winnowed the choices down.

    Here in FL real coverage starts with silver BCBS Options policies, at least from my perspective. They have a useful provider network and BCBS actually provides info on their network at the exchange so you can check if your doctors and local hospitals accept the plan.

    Other insurers are not providing clear info of their plans on the FL exchange. Clicking on the provider list function does not declare who is and who isn’t in the network for that specific plan.


    • The provider link for the silver Aetna plans is just a generic page outlining coverage.

    • The provider link for Humana’s silver 4600/6300 is a search engine that IDs doctors in their local HMO plan, of which the 4600/6300 doesn’t seem to be part of. But there is no indication that 4600/6300 isn’t part of the HMO at the website, my doctor’s office tells me they take Humana’s HMO, but they never heard of this plan.

    I’m calling the practices and hospital that are in my area to make sure that what I buy is actually useful. Except for BCBS the other plans I checked out on the exchange website are VERY vague about their networks. To clarify whether the Humana plan covers the same doctors that their HMO does, I have to call Humana and deal with their sales force, I don’t have the time for that.

    If they did it would be a good deal, which makes me believe it doesn’t. (If it’s too good to be true etc).

    The email I received on 4/11:

    If you were trying to enroll for 2014 coverage by the March 31 enrollment deadline and experienced system delays caused by heavy traffic, maintenance periods, or other special situations that prevented you from finishing the process on time, we may still be able to help you get covered.

    If you haven’t done so already, complete your enrollment by April 15, 2014:

    So does that mean it ends on 4/15 @ 12:00am or 4/16 @ 12:00am?

    The standard for casualty Insurance would be by 4/15 @ 12:00 am (the start of 4/15)
    If its 4/16 12am I still have a day to work with, if not I’m gonna press the enroll button real soon.

  73. 73
    Amir Khalid says:

    I chalk that up to fortune favouring the bold. Liverpool are now just four matches away from the Premier League title, and right now it’s in our hands whether we win it or not. I have a feeling about this, like I did about the Champion’s League campaign that ended in the Miracle of Istanbul.

  74. 74
    kuvasz says:

    So, Obama lied again!

  75. 75
    GHayduke (formerly lojasmo) says:


    Both, as any quality measure is likely to bend the cost curve. It is likely primarily to bend the cost curve, though patient outcomes will also be better.

  76. 76
    ruemara says:

    @Rob in CT: YEs, that was McLaren. S/He was demanding Mayhew post his financials so we could see how he was profiting from the ACA.

  77. 77
    WaterGirl says:

    @ruemara: Did I hear that this was your first day at the new job?

  78. 78
    Matt McIrvin says:

    @rikyrah: And I imagine they also fail to mention that you can sign up outside of open enrollment if you have a qualifying event, like loss of job, marriage, divorce, new baby, etc.

    “Neglected to sign up because lied to” not being a qualifying event.

    You’d think anyone who already has an employer-based plan would understand how this works, because they all work like that.

  79. 79
    AnotherBruce says:

    @Mandalay: You’d think Republicans would be all over a single payer system because it really would free up the labor market

    C’mon, what would lead you to believe that Republicans want a freed up labor market? Their ongoing decades long successful war against labor unions?

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