CBO’s Analysis of Major Health Care Legislation

Report: CBO’s Analysis of the Major Health Care Legislation

Chairman Pitts, Congressman Pallone, and Members of the Subcommittee, thank you for inviting me to testify about the Congressional Budget Office’s (CBO’s)analysis of the Patient Protection and Affordable Care Act (PPACA, Public Law 111-148) and the provisions of the Health Care and Education Reconciliation Act of 2010 (hereafter called “the Reconciliation Act,” P.L. 111-152) that are related to health care. CBO and the staff of the Joint Committee on Taxation (JCT) have provided the Congress with extensive analyses of the legislation both before and after its enactment in March 2010. My statement summarizes the major results of those analyses in particular, the projected effects of those laws on the federal budget (over the first 10 years and the subsequent decade), health insurance coverage, Medicare, premiums for health insurance, and labor markets.


Among other things, PPACA and the Reconciliation Act will do the following: establish a mandate for nearly all legal residents of the United States to obtain health insurance; create insurance exchanges through which certain individuals and families will receive federal subsidies to substantially reduce the cost of purchasing health insurance coverage; significantly expand eligibility for Medicaid; permanently reduce the growth of Medicare’s payment rates for most services (relative to the growth rates projected to occur under prior law); impose an excise tax on health insurance plans with relatively high premiums; impose certain taxes on individuals and families with relatively high income; and make various other changes to the federal tax code, Medicare, Medicaid, and other programs.

Estimated Effects on Health Insurance Coverage

CBO and JCT estimate that PPACA and the Reconciliation Act will increase the number of nonelderly Americans with health insurance by about 32 million in 2016 and about 34 million in 2021.1 About 95 percent of legal nonelderly residents will have insurance coverage in 2021, compared with a projected share of about 82 percent in the absence of that legislation (and an estimated 83 percent currently). In 2021, approximately 24 million people will purchase their own coverage through insurance exchanges, and Medicaid and the Children’s Health Insurance Program (CHIP) will have roughly 17 million additional enrollees, CBO and JCT estimate. Compared with the number projected under prior law, about 6 million fewer people will purchase individual coverage directly from insurers, and about 1 million fewer people will obtain coverage through their employer. About 23 million nonelderly residents will remain uninsured: About one-third of that group will be unauthorized immigrants, who are not eligible to participate in Medicaid or the insurance exchanges; another quarter will be eligible for Medicaid but are not expected to enroll; and the remaining fraction will include individuals who are ineligible for subsidies, are exempt from the individual mandate, choose not to comply with the mandate, or have some combination of those characteristics. READ FULL REPORT


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