CBO: Obamacare subsidies to jump 11% in 2016

The Congressional Budget Office says insurance subsidies to consumers will rise by 11% in 2016, the result of changes to the law as well as congressional action that will prevent Obamacare from taking in as much cash as anticipated.

The Hill:

Federal health insurance subsidies are expected to cost the federal government about $660 billion in 2016, which includes an 11 percent increase in the cost of ObamaCare subsidies, according to the Congressional Budget Office (CBO).

Much of the $136 billion in extra health spending stems from “significantly higher” enrollment in Medicaid, the federal health program for low-income people, according to the CBO’s latest annual report on healthcare spending.

The cost is also going up by about $28 billion because of Congress's recent legislation that postponed what's called the "Cadillac tax," on high-cost insurance plans. That bill also made the tax deductible to employers, further decreasing the amount of money the Affordable Care Act pulls in.

The CBO is bumping up its expectations for Medicaid enrollment while lowering projections for overall marketplace enrollment. The budget office now estimates that 24 million people have gained coverage under ObamaCare, about 1 million fewer than its previous year’s estimate.

That translates to about $46 billion less spending on subsidies for people enrolled in ObamaCare's federal marketplace plans.  

The budget office expects about 19 million people to be enrolled on marketplace plans by 2018 — a figure that is likely to stay flat over the next decade. The vast majority of those customers will receive federal subsidies, between 14 million and 16 million people.

Overall, the cost of healthcare subsidies is expected to grow about 5.4 percent annually as more people enroll in Medicaid. Over 10 years, the total cost of health subsidies is expected to rise to $1.1 trillion.

A small amount of those subsidies are offset — a total of about 5 percent — by taxes and penalties from health insurers, employers and people who lack insurance.

People enrolled in Medicaid or the Children’s Health Insurance Program (CHIP) receive about 40 percent of the federal dollars spent on insurance subsidies, according to the CBO.

Another 40 percent of the federal money on subsidies is related to people with employer coverage whose healthcare dollars are tax-exempt. The cost of those benefits is expected to be about $3.6 trillion over 10 years.  

The number of people who enroll in Obamacare's expanded Medicaid coverage is misleading.  It's believed that at least half the increase in enrollments are people who are already eligible for the program but had not signed up for it. 

So the big increase in subsidies is not the result of more people signing up for insurance through the exchanges, but rather the loss of revenue due to the delay of implementing the "Cadillac Tax" and more tax exemptions for employer coverage, as well as the increase in Medicaid coverage.  The number of Americans uninsured has not changed, but the cost of insuring those through Obamacare has increased.

This is success?  For those who think so, just wait until Hillary is president.  As editor Lifson points out, Clinton "also has a pen and a phone" and could use her executive power to increase subsidies even further. 

Obamacare's costs have now acquired their own momentum, and like Social Security and Medicare, those costs will soon begin to spiral out of control until they become unsustainable.  Obamacare will soon become one more federal program on the way to implosion.