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CBO Report (II) – Seeing into our health care future

Posted by John McDonough  February 6, 2014 10:43 PM

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Aside from the controversy described in the prior post, the new CBO Budget and Economic Outlook Report 2014-2024 contains many insights into the future of the US health care system, especially involving Medicare, Medicaid, and the Affordable Care Act. Let's explore.

Medicare: In 2013, Medicare had about 51 million beneficiaries; CBO expects that number to climb to 71 million by 2024 because of the Baby Boomer influx.

"The slowdown in [Medicare] cost growth during the past several years has been sufficiently broad and persistent to lead CBO to project that growth will be slower than usual for some years to come." CBO now anticipates Medicare services lower than it did last May, with reduced outlays 2014-2023 by $154 billion (or about 2%).

Medicaid: Enrollment is expected to rise from 69 million people in 2013 to 73 million in 2014 and to 89 million in 2024. By 2018 about 80% of the Medicaid eligible population will be in states that have extended coverage, currently at about 40%.

Affordable Care Act: ACA premium and cost sharing subsidies are expected to cost $18 billion in 2014 and to rise to $166 billion in 2024. CBO estimates that 5 million will receive exchange subsidies in 2014 rising to 19 million in 2016.

Uninsured: CBO estimates that the insurance coverage provisions of the ACA will markedly increase the number of nonelderly people who have health insurance, by about 13 million in 2014, 20 million in 2015, and 25 million through 2024. Still about 31 million non-elderly US residents are likely to be uninsured in 2024, roughly one out of every nine residents. Without the ACA, the number would be at about 56 million.

Of the remaining 31 million uninsured, about 30% (9 million) are expected to be unauthorized immigrants; about 20% (6 million) will be eligible for Medicaid but will choose not to enroll; about 5% (1.5 million) will be ineligible for Medicaid because they live in a state that has chosen not to expand coverage; and about 45% (14 million) will not purchase insurance even though they have access through an employer, an exchange, or directly from an insurer. If undocumented immigrants are included, 89% of US residents will have insurance coverage by 2024; not counting brings the proportion to 92%.

Risk Adjustment/Reinsurance/Risk Corridors: All three ACA programs, which take effect in 2014, reduce the likelihood that particular health insurers will bear especially high costs to cover the expenses of a disproportionate share of less healthy enrollees. They encourage insurers to offer coverage under the new federal rules and curtail their incentives to avoid accepting high-risk enrollees.Far from an insurance industry bailout, these programs will generate a net surplus of $8 billion for the federal government by 2024.

The big number to contemplate: by 2024, 180 million Americans will get their health insurance coverage through Medicare or Medicaid or exchange subsidies, or more than half the US population. A changed landscape for sure.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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About the author

John E. McDonough is a professor of practice at the Harvard School of Public Health. He is the author of the book “Inside National Health Reform”, published in 2011 by More »

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