Health and Economy Baseline Estimates

In the second year of the Affordable Care Act’s implementation, focus has shifted from website malfunctions and outreach efforts to the enduring problems of American health care: increasing and unpredictable costs, large numbers of uninsured individuals, and adequate access to care. The Center for Health and Economy (H&E) is dedicated to assessing the impact of proposed reforms that attempt to address these issues. The following report details the most recent updates to the H&E baseline estimates of insurance coverage, federal budgetary impact, plan choice, and the premium landscape of health insurance for Americans under the age of 65.

 

KEY FINDINGS:

  • In 2015, the change in average individual market premiums will vary by plan type, with projected premium increases ranging between 2 and 8 percent. In 2016, the increase in average premiums is projected to range between 0 and 5 percent.
  • Average subsidized premiums are expected to fluctuate in 2015 and 2016, as a result of a growing risk pool and increased participation of the young and healthy. After 2017, average subsidized premiums are expected to increase by 6 to 10 percent annually, driven by rising health care costs and less generous premium subsidies.
  • The individual market included an estimated 26 million members in 2014, with 5 million lives covered through subsidized insurance offered in the Marketplace. Subsidized enrollment is projected to grow to 25 million in 2016, and the total size of the individual market is estimated to expand to 39 million.
  • As premiums and health care costs rise, plans chosen in the individual market are expected to shift towards lower cost options. High subsidized enrollment in silver plans is projected to fade, as enrollment grows among households that are eligible for subsidies but not silver-plan cost-sharing.
  • Average premium subsidies are projected to fall from $7,600 in 2014 to $4,800 in 2016, as the risk pool in the Marketplace grows and higher income households enroll.
  • The health insurance coverage provisions under current law for the non-elderly are estimated to increase the Federal deficit by $4.316 trillion between 2016 and 2025.

 

INSURANCE COVERAGE

Table 1. Health Insurance Coverage (millions)

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Individual Market

26

32

39

37

36

35

34

34

33

33

32

32

  Health Insurance Marketplace

5

15

25

24

23

23

22

21

20

20

19

19

  Other Non-group Insurance

20

17

14

13

12

12

12

13

13

13

13

13

 

Employer Sponsored Insurance

151

149

147

147

148

148

148

148

148

148

147

146

 

Medicaid

47

49

51

51

52

52

53

53

53

54

54

54

 

Other Public Insurance2

8

9

10

11

11

12

12

13

13

14

15

16

   

Total Non-Elderly Population

275

276

277

279

280

282

283

284

286

287

289

290

Total Insured1

232

239

247

246

246

247

247

247

248

248

248

249

Uninsured1

43

37

31

33

34

35

36

37

38

39

40

41

1 All insurance coverage estimates refer only to the under-65 population.
2 Other Public Insurance includes under-65 Medicare enrollment.

H&E estimates there were 232 million non-elderly US residents with health insurance in 2014—84 percent of the total non-elderly population. Estimates of health insurance coverage encompass four primary categories: the individual market, employer sponsored insurance, Medicaid, and other public insurance. The individual market is divided into two subsets: subsidized and unsubsidized coverage. Subsidized coverage is purchased through the Health Insurance Marketplace, and unsubsidized coverage, is comprised of similar insurance plans purchased either directly from the insurer or through the Marketplace without financial assistance. H&E makes no distinction between unsubsidized enrollees through the Marketplace and households that purchase individual market insurance directly from an insurer. Estimates concerning Medicaid also include beneficiaries of the Children’s Health Insurance Program. Other public insurance is primarily comprised of Medicare coverage for disabled persons, but also includes Tricare, the Indian Health Services, and other federal health care programs for specific populations.

The initial rollout of the Marketplace is based on a three year implementation period and initial estimates of the uninsured population are benchmarked using the Congressional Budget Office (CBO) estimates for 2014 through 2016. The Department of Health and Human Services, as well as CBO, has recently projected that the Health Insurance Marketplace will take longer than 3 years to “ramp up.” H&E will wait until the end of the 2015 enrollment period and modify estimates accordingly.

By 2016, the number of insured, non-elderly Americans is projected to increase to 247 million—89 percent of the total non-elderly population. The increase in insured Americans is primarily the result of three factors: the expansion of Medicaid, the continuing implementation of the subsidized Marketplace, and an increasingly costly tax penalty for remaining uninsured. The population of non-elderly Medicaid beneficiaries is estimated to be 47 million in 2014 and will rise to 51 million by 2016. These estimates are subject to the uncertainty of each state’s decision regarding Medicaid expansion.

The individual market is estimated to expand from 26 million covered lives in 2014 to 39 million in 2016, driven largely by the rollout of the Marketplace. The increase in coverage through Medicaid and the individual market is in part offset by a decrease in those insured through employer sponsored coverage. As the individual market becomes more robust, more residents are expected to opt for plans offered in the Marketplace or directly by insurers in lieu of employer sponsored plans. Some employers may also decide not to offer health insurance coverage as an employee benefit.

As seen in the table above, the number of uninsured is projected to increase after 2016. In 2017, the phase out of the risk protections for insurance companies and the discontinuation of non-qualified health plans currently available in the market are expected to lead to 2 million fewer insured individuals. Rising costs and higher income contributions for subsidized enrollees are estimated to lead to higher uninsured numbers later in the analysis period.

 

PREMIUMS

Table 2. Average Premiums in the Individual Market

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Single Coverage Platinum

4,700

4,900

5,000

5,300

5,700

6,000

6,300

6,700

7,100

7,500

8,000

8,400

Gold

3,700

4,000

4,200

4,500

4,700

5,000

5,300

5,600

6,000

6,300

6,700

7,100

Silver2

4,300

4,400

4,600

4,800

5,100

5,400

5,800

6,100

6,500

6,800

7,200

7,700

Silver

3,100

3,200

3,200

3,400

3,600

3,800

4,000

4,300

4,500

4,800

5,100

5,400

Bronze

2,500

2,600

2,600

2,800

2,900

2,900

3,000

3,100

3,200

3,300

3,400

3,500

Catastrophic

1,600

1,700

1,700

1,900

1,900

2,000

2,100

2,100

2,200

2,300

2,300

2,400

   

Family Coverage1 Platinum

18,800

19,500

20,500

21,700

23,000

24,400

25,900

27,400

29,000

30,800

32,600

34,600

Gold

15,500

16,500

17,400

18,400

19,500

20,700

21,900

23,200

24,600

26,100

27,700

29,300

Silver2

16,800

17,300

18,200

19,200

20,400

21,600

22,900

24,200

25,700

27,200

28,800

30,500

Silver

12,200

12,600

13,200

14,000

14,800

15,800

16,700

17,800

18,900

20,000

21,300

22,600

Bronze

10,400

11,000

11,200

11,600

11,900

12,300

12,700

13,000

13,400

13,800

14,200

14,600

Catastrophic

6,100

6,300

6,500

6,400

6,600

6,800

7,000

7,200

7,400

7,600

7,900

8,100

1 Family coverage estimates are based on a family size of four persons.
2 Silver plans offered to low income households receive cost-sharing benefits that alter the effective premium relative to un-assisted silver plans.

Estimates of the subsidy eligible premiums available in the Marketplace are calculated using publicly available data on plans offered in the 36 Federally Facilitated Marketplaces. Premium estimates for unsubsidized health insurance are calculated from a sample of plans available on ehealthinsurance.com. In both cases, H&E uses the default age rating curve put forth by the Department of Health and Human Services to impute the applicable premium for a particular household. For simplification and comparability, H&E uses a standard family size of four (two adults and two children) when estimating family premiums. Subsidy payments and tax revenue are adjusted for the appropriate average family size in budget impact estimates.

Subsidized insurance plans offered in the Marketplace are divided into four categories—Platinum, Gold, Silver, and Bronze—that correspond to four approximate actuarial values—90 percent, 80 percent, 70 percent, and 60 percent. The actuarial value refers to the expected percentage of annual medical expenses covered by the insurance plan.

Table 3. Average Marketplace Premiums After Credits

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Single Coverage Platinum

4,100

4,200

4,300

4,500

4,800

5,100

5,400

5,800

6,100

6,500

6,900

7,400

Gold

3,300

3,500

3,500

3,700

4,000

4,200

4,500

4,700

5,000

5,300

5,700

6,000

Silver2

1,000

1,200

1,200

1,300

1,400

1,500

1,600

1,800

2,000

2,100

2,300

2,600

Silver

2,800

2,900

2,900

3,000

3,200

3,400

3,600

3,900

4,100

4,400

4,600

4,900

Bronze

2,000

2,100

2,000

2,000

2,100

2,100

2,200

2,200

2,300

2,300

2,400

2,400

   

Family Coverage1 Platinum

14,800

15,300

16,100

17,100

18,200

19,400

20,600

22,000

23,400

24,900

26,500

28,200

Gold

12,000

12,400

13,000

13,800

14,700

15,700

16,700

17,800

19,000

20,200

21,600

23,000

Silver2

3,600

4,000

4,400

4,800

5,200

5,700

6,200

6,700

7,300

7,800

8,300

8,800

Silver

9,800

10,200

10,600

11,300

12,000

12,800

13,700

14,600

15,500

16,600

17,700

18,800

Bronze

6,700

7,000

6,900

7,100

7,200

7,400

7,600

7,700

7,900

8,100

8,300

8,500

1 Family coverage estimates are based on a family size of four persons.
2 Silver plans that receive cost-sharing assistance have exceptionally low, after-credit premiums, primarily because they are only offered to households that receive generous premium subsidies.

It is important to note that, because of additional cost-sharing assistance, the plan designs categorized as Silver vary significantly in actuarial value across different income categories. For enrollees in the marketplace that earn between 100 and 150 percent of the Federal Poverty Level (FPL), Silver plans have an actuarial value of 94 percent, the highest of any plan offered in the Marketplace. For enrollees earning between 150 and 200 percent of FPL, Silver plans have an actuarial value of 87 percent, and for enrollees earning between 200 and 250 percent of FPL, Silver plans have a 73 percent actuarial value. H&E estimates the unsubsidized premiums for these high-value silver plans using the true actuarial value of the plan, rather than the Silver plan price.

Unsubsidized insurance plans, purchased in the Marketplace or directly from an insurer, are similar in design and price to those eligible for subsidies. The ACA requires that all health insurance plans meet certain requirements in order to certify as qualified coverage. However, some non-qualified health plans already in existence are available to consumers until 2017. Before the qualified health plan regulations are enforced, lower cost plan options are available to consumers who seek unsubsidized health insurance coverage outside of the Marketplace.

H&E assumes an underlying health insurance cost growth of 6 percent throughout the ten-year window. Actual year on year premium growth estimates vary as a result of changes in the enrollment mix and size of the insured risk pool. For example, the growing size of the individual market between 2014 and 2016—associated in part with increased participation of the young and healthy—leads to lower estimated increases in average premiums for many plan design categories. After 2017, premiums in the individual market are projected to grow annually at rates closer to the underlying growth rate of 6 percent. Due to growing applicable income contribution rates, subsidized premium growth for some plan designs is expected to exceed the underlying health insurance growth rate.

 

PLAN CHOICE

Table 4. Plan Choice Distribution in the Individual Market1

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Platinum

7%

6%

8%

7%

6%

5%

4%

4%

3%

3%

2%

2%

Gold

14%

14%

22%

21%

18%

15%

13%

10%

8%

6%

5%

4%

Silver2

48%

46%

31%

32%

31%

29%

27%

24%

21%

18%

14%

12%

Bronze

11%

19%

33%

39%

44%

49%

54%

60%

66%

71%

76%

80%

Catastrophic

20%

14%

7%

1%

1%

1%

1%

2%

2%

2%

2%

2%

   
Total Enrollment (millions)

26

32

39

37

36

35

34

34

33

33

32

32

Table 5. Plan Choice Distribution in the Health Insurance Marketplace

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Platinum

3%

7%

8%

7%

6%

5%

4%

3%

3%

2%

2%

2%

Gold

6%

15%

25%

22%

19%

16%

13%

11%

8%

6%

5%

4%

Silver2

77%

55%

33%

32%

30%

29%

27%

24%

21%

18%

14%

11%

Bronze

14%

23%

34%

39%

44%

50%

56%

62%

68%

74%

79%

83%

   
Total Enrollment (millions)

5

15

25

24

23

23

22

21

20

20

19

19

1 The Individual Market refers to the commercial, non-group market and includes sales of insurance within the Marketplace and direct sales by insurers.
2 Silver plans include plans that receive cost-sharing assistance.

H&E uses the subsidized and unsubsidized Marketplace enrollment in each metal level after the first year to calibrate plan preferences in the individual market and estimate plan choices throughout the ten-year analysis window.

H&E estimates that the large enrollment in Silver plans in 2014 among subsidized insurance plans will give way to higher enrollment in Platinum, Gold, and Bronze plans in 2015 and 2016. The large majority of Silver plan enrollment is estimated to be largely comprised of households eligible for extra cost-sharing benefits. As the risk pool grows to include more households that are eligible for premium credits but not cost sharing assistance (earning between 250 and 400 percent of FPL), the distribution of subsidized enrollment among the four metal levels is expected to become more evenly distributed.

Beyond 2016, lower cost insurance plans are estimated to gain market share, shifting away from more generous plans in response to the steadily rising cost of health insurance. Bronze plans are expected to dominate the individual insurance market by 2020. Under the ACA, catastrophic coverage is not certified as qualified health insurance coverage for adults over the age of 30. However, that provision is not enforced for adults over the age of 30 that are already enrolled in catastrophic coverage until 2017.

 

SUBSIDIES

Table 6. Average Per-Person Subsidy
Household Income (Percent of FPL)

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

100% – 133%

8,500

7,700

6,700

7,000

7,400

7,700

8,000

8,400

8,600

8,800

8,900

9,000

133% – 150%

8,000

7,200

7,200

7,600

8,000

8,500

8,900

9,200

9,500

9,700

9,600

9,400

150% – 200%

7,700

7,500

7,900

8,200

8,500

8,700

8,800

8,900

9,000

9,000

9,000

9,100

200% – 250%

6,700

5,800

6,000

6,300

6,600

6,900

7,200

7,500

7,700

8,000

8,300

8,600

250% – 300%

4,400

3,300

2,500

2,700

3,000

3,200

3,500

3,800

4,200

4,600

4,900

5,300

300% – 400%

3,700

2,000

1,300

1,400

1,500

1,600

1,700

1,900

2,000

2,200

2,400

2,600

 

Average Subsidy1

7,600

6,200

4,800

5,000

5,300

5,500

5,800

6,100

6,400

6,600

6,900

7,100

1 Includes the value of cost-sharing assistance.

Under the ACA, eligible households may purchase coverage on the Marketplace for a specified percentage of household income that ranged from 2 to 9.5 percent in 2014, depending on income. A federal subsidy pays the remaining portion of the premium that is not covered by the household’s specified income contribution. This specified income contribution is also subject to annual increases if the annual increase in health insurance costs exceeds a measure of household income growth. In 2015, the lowest income contribution increased to 2.01 percent, and the highest income contribution increased to 9.56 percent. H&E also projects an additional cost control measure, which prescribes further increases in the income contribution if total subsidy spending exceeds .504 percent of GDP, will be triggered after 2018, the first year in which it is eligible to take effect.

H&E estimates that the average subsidy for an eligible enrollee in the exchange will fall from a high of $7,600 in 2014 to $4,800 in 2016. During the first year of implementation, the Marketplace is estimated to have encouraged subsidized enrollment primarily among those who receive the highest benefit through premium credits and cost-sharing assistance. By 2016, more households that receive only small subsidies will either make the decision to purchase insurance rather than pay the penalty, or switch from other unsubsidized insurance plans, leading to lower average subsidies. Beyond 2017, the average per-person subsidy in the exchange will increase annually by 3 to 5 percent.

The average subsidy calculation includes cost-sharing assistance, which is only available to enrollees earning less than 250 percent of the Federal Poverty Level (FPL). H&E estimates the cost-sharing portion of subsidy spending by calculating the difference between the actuarially accurate premium for the modified plan design and the average cost of a Silver plan absent cost-sharing assistance.

 

BUDGET

H&E estimates the impact on the federal budget of the major health insurance coverage provisions of current law with regards to the non-elderly population. Budget impact estimates do not include estimates for non-ACA tax expenditures encoded in current law, such as the employer sponsored health insurance tax expenditure.[i] H&E does, however, estimate the additional revenue gained by removing the tax exclusion for high-cost employer sponsored insurance plans implemented by the ACA, known as the Cadillac tax.

Medicaid coverage and expenditure estimates are calculated based on the number of states that had chosen to expand Medicaid by January 1, 2015. These predictions are sensitive to future state-level decisions on expansion as well as new program waivers that alter the design of a state’s Medicaid program.

Over the decade spanning between 2016 and 2025, H&E estimates that non-elderly coverage provisions under current law will cost $4.668 trillion. The cost is partially off-set by $352 billion in increased revenue through the tax on high-cost employer sponsored insurance, the individual shared responsibility tax, and the employer shared responsibility tax. The ACA introduced a number of taxes that are not directly related to the health insurance coverage of the non-elderly population. In 2012, CBO estimated non-coverage provisions of the ACA to reduce the deficit by $1.28 trillion over 10 years.[ii]

Table 7. Cost of Current Law Coverage Provisions (billions)1

2016 – 2025

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Sources of Funds2                          
  Tax on Employer Sponsored Health Insurance

0

0

0

0

21

21

21

22

21

21

19

17

164

  Individual and Employer Mandate Taxes

6

6

10

11

13

14

16

19

21

24

27

31

187

  Subtotal

6

6

10

11

34

36

38

40

43

45

47

49

352

                               
Uses of Funds3

  Health Insurance Marketplace

  Cost Sharing Benefits

10

19

19

19

18

17

16

15

13

11

8

6

143

  Premium Tax Credits

33

76

101

104

108

111

115

118

122

127

132

137

1,176

  Medicaid

182

194

209

213

220

227

233

241

249

259

269

280

2,401

  Medicare

65

72

76

82

86

90

93

97

101

104

108

111

948

  Subtotal

290

361

405

419

432

446

457

471

486

501

517

535

4,668

                               
Net Budgetary Impact4

-285

-355

-395

-408

-399

-410

-420

-431

-443

-456

-470

-486

-4,316

1 Cost estimates refer only for the under-65 population.
2 Positive values denote increases in revenue; negative values denote decreases in revenue.
3 Positive values denote increases in spending; negative values denote decreases in spending.
4 Positive values denote surplus; negative values denote deficit.

 

PRODUCTIVITY AND ACCESS

In an effort to shed light on how health care policy and consumer choices affect health care quality, H&E estimates two measures: the Medical Productivity Index (MPI) and the Provider Access Index (PAI). Health insurance plan designs are associated with varying degrees of access to desired physicians and facilities as well as incentives that promote or discourage efficient use of resources. H&E estimates each index by attributing productivity and access scores to the range of plan designs available and exploits changing plan choices to project the evolution of health care quality.

The Medical Productivity Index is designed to reflect the expected gains in health status in return for medical expenditures. Plan designs that encourage patients to consider the price of treatment when making health care decisions, such as high deductible plans, are ascribed high MPI scores, while plans with low cost-sharing requirements or first dollar coverage are ascribed low scores. The index ranges from a low of 1.0 to a high of 4.0. 

Table 8. Medical Productivity Index

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Individual Market

2.5

2.4

2.3

2.2

2.3

2.3

2.3

2.3

2.3

2.4

2.4

2.4

  Marketplace

2.0

2.1

2.2

2.2

2.2

2.2

2.2

2.3

2.3

2.3

2.3

2.3

  Other Non-Group Insurance

2.7

2.9

3.0

2.5

2.6

2.7

2.7

2.8

2.8

2.9

2.9

3.0

   

Employer Sponsored Insurance

2.3

2.3

2.3

2.3

2.4

2.4

2.4

2.5

2.5

2.5

2.6

2.6

   

Private Insurance

2.3

2.3

2.3

2.3

2.4

2.4

2.4

2.4

2.4

2.5

2.5

2.5

   

Medicaid

1.5

1.5

1.5

1.5

1.5

1.5

1.5

1.5

1.5

1.5

1.5

1.5

   

Total Insured1

2.1

2.1

2.1

2.1

2.2

2.2

2.2

2.2

2.2

2.2

2.3

2.3

Table 9. Provider Access Index

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Individual Market

3.3

3.3

3.1

2.9

2.8

2.7

2.6

2.5

2.3

2.2

2.1

2.0

  Marketplace

3.8

3.5

3.1

3.0

2.9

2.7

2.6

2.5

2.3

2.2

2.1

2.0

  Other Non-Group Insurance

3.1

3.1

3.0

2.3

2.3

2.3

2.3

2.3

2.3

2.3

2.3

2.3

     
Employer Sponsored Insurance

3.9

3.8

3.8

3.8

3.7

3.7

3.7

3.7

3.7

3.7

3.7

3.6

     
Private Insurance

3.8

3.7

3.7

3.6

3.6

3.6

3.5

3.5

3.5

3.5

3.4

3.4

     
Medicaid

1.0

1.0

1.0

1.0

1.0

1.0

1.0

1.0

1.0

1.0

1.0

1.0

     
Total Insured1

3.2

3.1

3.1

3.0

3.0

2.9

2.9

2.9

2.9

2.8

2.8

2.7

1 Productivity and access estimates refer only to the under-65, non-disabled population

 

The Provider Access Index is designed to reflect the availability of primary and specialty physicians and facilities. Plans with large networks, such as Platinum plans offered in the individual market, are ascribed high scores for providing exceptional access. Bronze and other low cost plans that afford access only to limited networks are ascribed low PAI scores. The index ranges from a low of 1.0 to a high of 5.0.

 

CHANGES FROM PREVIOUS BASELINE ESTIMATES

As a new and improving organization, H&E is constantly reevaluating the assumptions and technical methods that are used to create baseline and proposed estimates of health insurance coverage provisions under current law. This publication is the third comprehensive baseline report, and the second to include detailed estimates on the net budgetary impact of the ACA and Medicaid for individuals under 65. H&E currently projects that the under-65 coverage provisions of current law will increase the deficit by $355 billion in 2015, an increase of $67 billion from the July 2014 baseline estimate. H&E also projects that, on average, 239 million individuals under the age of 65 will be insured during the year of 2015, which is nearly identical to the July 2014 baseline estimate due to offsetting differences. The updates to baseline predictions are, in part, a result of growing information concerning the rollout of the ACA that inform many of the underlying assumptions in our modelling. However, the principal differences are a result of a few key technical changes.

Table 10. Change in Coverage Estimates (millions)

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Individual Market

-9

-10

-12

-12

-12

-13

-13

-14

-14

-15

  Health Insurance Marketplace

0

0

0

-1

-2

-2

-3

-3

-4

-5

  Other Non-group Insurance

-9

-10

-11

-11

-11

-11

-10

-10

-10

-10

 

Employer Sponsored Insurance

*

*

*

*

*

*

*

*

1

1

 

Medicaid

5

3

4

4

4

4

4

4

4

4

 

Other Public Insurance

6

7

7

8

8

8

8

8

8

8

   

July 2014 Total Insured1

230

239

247

246

247

247

248

248

249

250

Feb 2015 Total Insured1

232

239

247

246

246

247

247

247

248

248

1 All insurance coverage estimates refer only to the under-65 population.
* Difference between baseline estimates is between 0 and 1 billion.

In the preparation of estimates for this report, H&E incorporated state-level Medicaid enrollment information in order to better estimate expansion decisions, the interaction between Marketplace and Medicaid enrollment, and the population of Medicaid enrollees that are funded at a higher federal matching rate. Separate from the technical improvements in modelling state-specific Medicaid populations, H&E also revised upwards the estimate of under-65 Medicaid enrollees in 2014 by 5 million based on higher than anticipated enrollment throughout the course of the year. The combination of these changes involving under-65 Medicaid coverage leads to a total spending estimate of $2.227 trillion between 2014 and 2023, up from the July 2014 estimate of $2.085 trillion.

The estimates for this report also account for the population of disabled individuals under the age of 65 insured through Medicare, which is estimated to be 6 million in 2014. In displaying coverage estimates, H&E includes this population in the category of Other Public Insurance. In previous baseline estimates, the disabled population was considered to be a part of the individual market, which led to an over-estimation of the number of households who may potentially purchase individual market insurance, as well as a less accurate characterization of household demographics. This report includes a separate cost estimate for the budgetary impact of under-65 Medicare coverage, which the main contribution to higher spending estimates relative to the July 2014 estimates. For comparison purposes, the table above displays the current baseline both with and without Medicare spending.

Table 11. Change in Budgetary Impact Estimates (billions)1

2014 – 2023

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Change in Sources of Funds Baseline Estimates2                      
  Tax on Employer Sponsored Health Insurance

0

0

0

0

-7

-8

-9

-9

-10

-11

-53

  Individual and Employer Mandate Taxes

*

*

*

*

*

*

*

*

*

*

0

  Subtotal

0

0

0

0

-7

-8

-9

-9

-10

-11

-53

                         
Change in Uses of Funds Baseline Estimates3

  Cost Sharing Benefits

-2

-1

-4

-4

-4

-4

-4

-4

-4

-4

-34

  Premium Tax Credits

-6

-15

-32

-35

-37

-40

-43

-46

-49

-53

-356

  Medicaid

17

10

16

16

16

15

14

14

13

11

142

  Subtotal

8

-5

-19

-23

-26

-29

-32

-36

-40

-45

-248

                         
July 2014 Net Budgetary Impact4

-211

-288

-339

-349

-332

-341

-350

-361

-373

-385

-3,328

Feb 2015 Net Budgetary Impact without Medicare Estimate4

-220

-283

-319

-325

-313

-320

-326

-334

-342

-351

-3,134

Feb 2015 Net Budgetary Impact with Medicare Estimate4

-285

-355

-395

-408

-399

-410

-420

-431

-443

-456

-4,000

1 Cost estimates refer only for the under-65 population.
2 Positive values denote increases in revenue; negative values denote decreases in revenue.
3 Positive values denote increases in spending; negative values denote decreases in spending.
4 Positive values denote surplus; negative values denote deficit.
* Difference between baseline estimates is between 0 and 1 billion.

The two technical changes regarding Medicaid and Medicare also have important implications for the estimates concerning the subsidized Health Insurance Marketplace. In particular, the changes have led H&E to estimate fewer low-income enrollees in subsidized Marketplace plans, which in turn leads to lower estimates of income-based subsidies and cost-sharing. In 2016, this report estimates $39 billion less in subsidy and cost sharing than in the July 2014 baseline, despite the enrollment estimates remaining unchanged. The change in the income distribution for subsidized Marketplace enrollees is also a factor in lowering the estimates for Marketplace enrollment towards the end of the analysis period. H&E now estimates that a significant portion of subsidized households have a relatively higher incomes and lower subsidies, which leads to more households to forgo insurance in response to rising health insurance premiums. This report estimates that 5 million fewer individuals will be insured through the subsidized Marketplace in 2023 than in the July 2014 baseline.

 

UNCERTAINTY IN THE PROJECTIONS

The Center for Health and Economy uses a peer-reviewed micro-simulation model of the health insurance market to analyze various aspects of the health care system.[iii] And as with all economic forecasting, H&E estimates are associated with substantial uncertainty. While the estimates provide good indication on the nation’s health care outlook, there are a wide range of possible scenarios that can result from policy changes, and current assumptions are unlikely to remain accurate over the course of the next ten years. For instance, the uncertainty surrounding the implementation of the Affordable Care Act and similar obstacles facing the implementation of new health care overhauls affect the accuracy of short-term coverage estimates. Importantly, this uncertainty does not lead to biased results. H&E attempts to depict an unbiased, middle -ground representation of the future should the policy and economic environment remain constant. While the goal is to project the most likely scenario, actual events may differ significantly from published predictions.

 



[i] The CBO estimates that the tax exclusion for employer sponsored insurance will cost $3.4 trillion over 10 years. See Distribution of Major Tax Expenditures in the Individual Income Tax System, Congressional Budget Office, May 2013, at: http://www.cbo.gov/sites/default/files/cbofiles/attachments/43768_DistributionTaxExpenditures.pdf

[ii] Elmendorf, Douglas W., “Letter to the Honorable John Boehner providing an estimate for H.R. 6079, the Repeal of Obamacare Act,” Congressional Budget Office, July 24, 2012, available at: http://www.cbo.gov/sites/default/files/cbofiles/attachments/43471-hr6079.pdf

[iii] Parente, S.T., Feldman, R. “Micro-simulation of Private Health Insurance and Medicaid Take-up Following the U.S. Supreme Court Decision Upholding the Affordable Care Act.” Health Services Research. 2013 Apr; 48(2 Pt 2):826-49.

 

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[i] The Department of Health and Human Services, as well as CBO, has recently projected that the Health Insurance Marketplace will take longer than 3 years to “ramp up.” H&E will wait until the end of the 2015 enrollment period and modify estimates accordingly.

[ii] The CBO estimates that the tax exclusion for employer sponsored insurance will cost $3.4 trillion over 10 years. See Distribution of Major Tax Expenditures in the Individual Income Tax System, Congressional Budget Office, May 2013, at: http://www.cbo.gov/sites/default/files/cbofiles/attachments/43768_DistributionTaxExpenditures.pdf

[iii] Elmendorf, Douglas W., “Letter to the Honorable John Boehner providing an estimate for H.R. 6079, the Repeal of Obamacare Act,” Congressional Budget Office, July 24, 2012, available at: http://www.cbo.gov/sites/default/files/cbofiles/attachments/43471-hr6079.pdf

[iv] Parente, S.T., Feldman, R. “Micro-simulation of Private Health Insurance and Medicaid Take-up Following the U.S. Supreme Court Decision Upholding the Affordable Care Act.” Health Services Research. 2013 Apr; 48(2 Pt 2):826-49.