The cost of implementing the Affordable Care Act is expected to rise this year as more people enroll in Medicaid to take advantage of the law’s benefits, according to a report released Thursday.
Around 22 million people under the age of 65 in 2016 are expected to enroll in health care coverage provided by President Obama’s signature domestic policy accomplishment, driving up the cost of law to the federal government by $110 billion in 2016, according to new estimates from the Congressional Budget Office.
The budget office attributed the vast majority of the expected cost increase to greater-than-expected Medicaid enrollment numbers. Overall, CBO projected, the cost to the government of those enrolled in Medicaid and in the marketplaces created under the law will be $1.4 trillion over 10 years, which is $136 billion more than the scorekeeper previously expected.
The report comes one day after Democrats touted the success of Obamacare on its sixth anniversary. But the law remains politically divisive with congressional Republicans trying and failing to repeal it in recent years. The GOP is expected to continue to target the law this year in advance of the November elections.
The report released Thursday focused largely on the expansion of health care coverage and CBO noted that other provisions in the law — such as tax increases and changes to Medicare — should ensure that it will not add to the government’s debt over the long-term.
Some of the law’s tax provisions, however, have proven unpopular with members of both parties.
For instance, late last year Congress enacted a two-year delay of a 40 percent tax on expensive employer-based plans, known as the Cadillac Tax, that CBO projects will cost the government $18 billion over 10 years.
The increase in Medicaid enrollment may fuel resistance among some Republican governors who have been unwilling to expand the program in their states.
States have been slower than originally expected to accept Medicaid expansion allowed under the law after many GOP governors balked at the idea of greater federal control of the healthcare system. Enrollment in those 30 states and the District of Columbia that did choose to accept the program is expected to grow to 18 million in 2016, up from 14 million projected last year, according to CBO.
The report also includes new evidence that employers are not rushing to cancel insurance plans now that their employees can buy health care on the exchanges. The CBO now estimates that around 2 million employers will drop coverage in 2016, 4 million less than the 6 million previously expected. The report goes on to say that budget scorekeepers expect the drop-off rate to grow in later years.
The number of people buying insurance through state-based exchanges or through healthcare.gov has continued to be lower than expected. Approximately 19 million people are expected to find coverage on those platforms, down from 22 million projected in 2015.
The combined effect is that approximately 90 percent of insurance eligible people will be covered — through Medicaid, employer-based coverage or insurance purchased on either the exchange or independently — this year.
The CBO also released a separate estimate that found the projected deficit this fiscal year will be about $10 billion less than previously expected. The agency announced in January that the federal deficit was expected to increase by $105 billion to $544 billion, due mostly to a massive package of business and individual tax breaks enacted last year.
The new estimate found that better-than-expected tax receipts have cut the projected fiscal 2016 deficit to $534 billion.