2 UPDATED ESTIMATES FOR THE COVERAGE PROVISIONS OF THE AFFORDABLE CARE ACT MARCH 2012
Insurance Program (CHIP), tax credits and other subsidies for the purchase of
health insurance through the newly established exchanges and related costs,
and tax credits for small employers,
■ Offset in part by about $0.4 trillion in receipts from penalty payments, the
new excise tax on high-premium insurance plans, and other budgetary effects
(mostly increases in tax revenues).
Those amounts do not encompass all of the budgetary impacts of the ACA
because that legislation has many other provisions, including some that will cause
significant reductions in Medicare spending and others that will generate added
tax revenues, relative to what would have occurred under prior law. CBO and JCT
have previously estimated that the ACA will, on net, reduce budget deficits over
the 2012–2021 period; that estimate of the overall budgetary impact of the ACA
has not been updated.
The current estimate of the gross costs of the coverage provisions ($1,496 billion
through 2021) is about $50 billion higher than last year’s projection; however, the
other budgetary effects of those provisions, which partially offset those gross
costs, also have increased in CBO and JCT’s estimates (to $413 billion), leading
to the small decrease in the net 10-year tally. Over the 10-year period from 2012
through 2021, enactment of the coverage provisions of the ACA was projected
last March to increase federal deficits by $1,131 billion, whereas the March 2012
estimate indicates that those provisions will increase deficits by $1,083 billion.
The net cost was boosted by an additional $168 billion in estimated costs for
Medicaid and CHIP and $8 billion less in estimated revenues from the excise tax
on high-premium health insurance plans. But those increases were more than
offset by a reduction of $97 billion in the projected costs for the tax credits and
other subsidies for health insurance provided through the exchanges and related
spending, a reduction of $20 billion in the projected costs for tax credits for small
employers, and a reduction of $107 billion in deficits from the projected revenue
effects of changes in taxable compensation and penalty payments and from other
small changes in estimated spending.
This report also presents estimates through fiscal year 2022, because the baseline
projection period now extends through that additional year. The ACA’s
provisions related to insurance coverage are now projected to have a net cost of
$1,252 billion over the 2012–2022 period (see Table 2, following the text); that
amount represents a gross cost to the federal government of $1,762 billion, offset
in part by $510 billion in receipts and other budgetary effects (primarily revenues
from penalties and other sources). The addition of 2022 to the projection period
has the effect of increasing the costs of the coverage provisions of the ACA
See the statement of Douglas W. Elmendorf, Director, Congressional Budget Office, before the
Subcommittee on Health, House Committee on Energy and Commerce, CBO’s Analysis of the
Major Health Care Legislation Enacted in March 2010 (March 30, 2011). For the provisions of
the ACA unrelated to insurance coverage, most of which involve ongoing programs or revenue
streams, separating the portion of the updated projections for those programs or revenue streams
that is attributable to the ACA from the portion that would have existed under prior law is very
difficult.