The Growing Budget Cost of Insurance Subsidies in the Affordable Care Act

| HealthCare | Douglas Holtz-Eakin
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WASHINGTON – The American Action Forum today released a new study finding that the cost of the central feature of the Affordable Care Act (ACA) has increased by nearly 25 percent, and will likely continue to rise. The insurance subsidies are the means for increased health care coverage, the primary goal of the ACA. AAF finds that since passage in 2010, projected costs been revised upward by nearly 25 percent.

Executive Summary

The ACA health insurance subsidies are the most significant expansion of entitlements since the 1960s. In light of the precarious fiscal outlook for the federal government, its cost is a central concern to policymakers and taxpayers alike.

When the ACA passed in June 2010, the Congressional Budget Office projected the budget cost between fiscal 2012 and fiscal 2019 to be $462 billion. By June 2012, the cost for these same years had jumped to $574 billion, an increase of nearly 25 percent. See Summary Table.

Unfortunately, there are grounds to anticipate further growth in the cost of the entitlement due to the risks of faster than expected health care inflation, slow growth in incomes, and the potential for less employer-sponsored insurance in the future.

Read the complete paper here.