* 2015-2024 deficits $286 bln lower than February forecast
* Smaller premiums help reduce health subsidy costs
* Fiscal year 2014 deficit estimated to fall to $492 billion
(Recasts with emphasis on healthcare, adds Carney comments in
By David Lawder and David Morgan
WASHINGTON, April 14 Health insurance subsidies
under the Affordable Care Act will cost slightly less than
previously thought, helping to slow down the forecast growth of
U.S. deficits over the next decade, the Congressional Budget
Office said on Monday.
The non-partisan CBO, in revisions to its annual budget
estimates, said the reduced subsidy cost estimates partly
reflect lower premiums now being charged in government-run
"Obamacare" exchanges and accommodations that allow previously
canceled health plans to be extended.
The reduced health cost estimates made up the bulk of a $286
billion reduction in CBO's cumulative deficit forecast for
fiscal years 2015 through 2024, compared with a forecast in
February, to $7.62 trillion.
The revisions gave the Obama administration a small piece of
positive news on the embattled healthcare reforms after last
week's departure of Health and Human Services Secretary Kathleen
Sebelius prompted fresh criticism of Obamacare's troubled
launch. White House spokesman Jay Carney wasted no time in
trying to capitalize on it.
"This report demonstrates the Affordable Care Act is
working," Carney told a news briefing. "It shows that
marketplace healthcare costs have gone down because premium
estimates have gone down."
The report also forecast less severe premium increases in
benchmark health plans offered through the exchanges.
For the fiscal year 2014 ending Sept. 30, CBO said, the
deficit would fall to $492 billion from a $514 billion February
estimate - and nearly a third lower than last year's $680
billion deficit. The forecasts assume no changes to tax and
The agency attributed this year's decline to technical
revisions to spending estimates for discretionary programs. But
from 2015 onward, it estimated a $186 billion reduction in
health insurance subsidies and related spending.
The current CBO estimate for the average subsidy for 2014 is
$300, or 6 percent less than estimated in February. The subsidy
estimated for 2024 is $1,200, or 14 percent less.
In an accompanying report, CBO and the Joint Committee on
Taxation left unchanged their estimate that 6 million people on
average will be covered by private health insurance purchased
through Obamacare's marketplaces over the course of this year,
saying enrollment will vary at different times as people leave
and enter the marketplaces.
The administration announced last week that 7.5 million
people have signed up for private coverage and the number is
expected to rise.
CANCELED PLANS LIVE ON
Several factors led to the lower CBO cost estimates for
Obamacare marketplace subsidies, including steps the
administration took last year to accommodate people who were
notified that their health insurance plans would be canceled for
not complying with Obamacare's benefits and consumer protection
standards. Researchers said plan premiums were also less costly
than expected, while narrow provider networks made some
insurance coverage less attractive.
Millions of people received cancellation notices from their
insurers last fall, spawning a brief public uproar against
Obama, his law and the Democrats who voted for it. The
administration responded by saying state insurance regulators
could allow people to renew noncompliant plans through September
2017. It also offered hardship exemptions to those who preferred
to go uninsured or opt for low-premium catastrophic coverage.
People taking advantage of these accommodations would remain
outside the Obamacare marketplaces in plans that do not qualify
CBO also estimated a $98 billion 10-year reduction in
Medicare outlays due to lower spending on prescription drugs and
hospital insurance compared with the February estimate.
Medicaid, the healthcare program for the poor, would see a $29
billion reduction, CBO said.
FALLING DEFICITS TO END
The CBO left intact its previous economic projections, which
envision rising deficits after 2015 as more of the massive "baby
boom" generation retires and draws more federal benefits or
drops out of the workforce.
Mandatory spending programs, including Medicare, Social
Security and Medicaid, will swell to 11.5 percent of GDP in 2024
from 9.5 percent in 2013. In 2024, they will cost $3.1 trillion,
CBO said, accounting for more than half of all federal spending.
"If current laws do not change, the period of shrinking
deficits will soon come to an end," the CBO said in the report.
Deficits will reach a low point of $469 billion, or 2.6
percent of U.S. gross domestic product, in fiscal 2015, then
gradually start to rise, topping $1 trillion again in 2023 and
2024, a level that would be near 4 percent of GDP.
(Reporting By David Lawder; Editing by Doina Chiacu and