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You are here: Home / Anderson On Health Insurance / And the CBO lowers the boom

And the CBO lowers the boom

by David Anderson|  February 4, 20142:20 pm| 42 Comments

This post is in: Anderson On Health Insurance

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And the CBO brings the hammer: (P.102)

Other technical changes to estimates of mandatory spending include a $6 billion decrease in CBO’s projections of outlays for premium and cost-sharing subsidies provided through health insurance exchanges over the 2014–2023 period. That decrease largely reflects lower expected enrollment in2014 in plans sold through the exchanges, and lower premiums for those plans, than previously projected.

In addition, CBO’s current projections include newly estimated payments (and collections) for the risk corridor program, a system of profit and loss sharing to limit the risks that insurers will face during their first few years of operating under the ACA. The government’s outlays for
that program are estimated to total $8 billion between 2015 and 2017, and its revenue collections from the program are expected to total $16 billion during that period.

  • Bad news — CBO is projecting fewer people getting coverage in 2014 through the Exchanges.
  • Good news -CBO is projecting that the failure of the Exchange launch only depresses enrollment for a year, enrollment resumes to trend in the out-years.
  • Subsidies are lower because premiums are lower
  • The risk corridors will behave like Medicare Part D risk corridors and be a net money maker for the federal government
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Reader Interactions

42Comments

  1. 1.

    Comrade Jake

    February 4, 2014 at 2:25 pm

    Excellent post. Why does the GOP want to delay the risk corridors for a year?

  2. 2.

    Davis X. Machina

    February 4, 2014 at 2:29 pm

    I remember when this was all about freedom. Now we’re just squabbling about money.

    It’s so tawdry. So….low.

  3. 3.

    Bruuuuce

    February 4, 2014 at 2:30 pm

    @Comrade Jake: Why does the GOP want to delay the risk corridors for a year?

    “The risk corridors will behave like Medicare Part D risk corridors and be a net money maker for the federal government.” If the ACA succeeds, their position with voters is imperiled, especially those erstwhile Republican or undecided voters who benefit directly. If the Feds do well AND people do well, they might as well just go Galt, unless their new welfare queens meme (whatever form it may take this time around) drums up the necessary FUD beyond their 27% base.

  4. 4.

    elm

    February 4, 2014 at 2:31 pm

    Naturally, the establishment media reports this as:

    “Health Care Law May Result in 2 Million Fewer Full-Time Workers”

    or

    “Obamacare Will Lead To 2 Million Fewer Workers In The Labor Force”

    When the actual report says:

    For some people, the availability of exchange subsidies under the ACA will reduce incentives to work both through a substitution effect and through an income effect. The former arises because subsidies decline with rising income (and increase as income falls), thus making work less attractive. As a result, some people will choose not to work or will work less—thus substituting other activities for work. The income effect arises because subsidies increase available resources—similar to giving people greater income—thereby allowing some people to maintain the same standard of living while working less. The magnitude of the incentive to reduce labor supply thus depends on the size of the subsidies and the rate at which they are phased out.

    That is: PEOPLE WILL NO LONGER BE FORCED TO WORK IN ORDER TO AFFORD HEALTH CARE.

  5. 5.

    Comrade Jake

    February 4, 2014 at 2:32 pm

    @Bruuuuce: So it’s simply ideology, nothing principled? I suppose that should have been obvious.

  6. 6.

    elm

    February 4, 2014 at 2:32 pm

    Wow, the NYT opening paragraph is even worse than the headline:

    A new analysis from the Congressional Budget Office says that the Affordable Care Act will result in more than 2 million fewer full-time workers in the next several years, providing Republican opponents of the law a powerful political weapon leading up to this year’s midterm elections.

    The CBO report does not say what they claim. This is simply inaccurate/lying.

  7. 7.

    Richard Mayhew

    February 4, 2014 at 2:34 pm

    @Comrade Jake: They want to cancel them entirely because it’s a bail-out — and a mighty strange bail-out it is when the bail-outer makes money on the deal

  8. 8.

    Turgidson

    February 4, 2014 at 2:35 pm

    @elm:

    Yes. And people can take risks they might not otherwise – switch jobs, quit a job to start a business, retire earlier than they thought because they don’t need to run out the clock until Medicare kicks in (which in turn opens up more jobs for the young and disproportionately unemployed), etc. etc. Things that are a net positive for the economy in the long run. But that’s not the story we’ll hear. “Job killing Obamacare” is what we’re going to hear. Until our ears bleed.

  9. 9.

    Bruuuuce

    February 4, 2014 at 2:35 pm

    @Comrade Jake: I wouldn’t even call it ideology as much as politics. 2014 looks to be a dogfight for control in an environment where the deck is stacked in favor of the Rs, and if they lose, the playing field might be evened, which would be horrific for them. (Aside from gerrymandered states, of course.)

  10. 10.

    Violet

    February 4, 2014 at 2:39 pm

    @elm:

    PEOPLE WILL NO LONGER BE FORCED TO WORK FOR A GIANT CORPORATION IN A FULL TIME JOB IN ORDER TO AFFORD GET HEALTH CARE INSURANCE AT ALL

    Fixed.

  11. 11.

    Richard Mayhew

    February 4, 2014 at 2:41 pm

    @elm: The CBO has been projecting this type of result since the first time it was asked to score a Democratic bill:

    Here is a 2011 estimate

    Basically the CBO is projecting that people who otherwise could afford to retire but could not get health insurance until they qualified for Medicare will retire or otherwise get out of the labor market.

  12. 12.

    Mnemosyne (iPhone)

    February 4, 2014 at 2:44 pm

    @elm:

    And yet, sadly, there will be a lot of people on the left who will scream about Obamacare forcing people to lose their jobs without thinking through the fact that, demographically, we SHOULD be having a bunch of people leaving the workforce in the next decade or so as the Baby Boomers reach retirement age. Are Boomers really supposed to stay in the workforce past age 65 just to make people feel better about the workforce participation rate?

  13. 13.

    elm

    February 4, 2014 at 2:46 pm

    @Richard Mayhew: Yes, and as a human being, I see it as marvelous news.

    It’s disgusting to see that spun into the headlines and news coverage that we actually get.

    Further samples:

    “Congressional Budget Office: Obamacare A Tax On Work”
    “CBO: O-Care slowing growth, contributing to job losses”
    “Report fuels Obamacare debate with estimates of job loss”
    “Obamacare may push people out of the workforce”

  14. 14.

    NonyNony

    February 4, 2014 at 2:53 pm

    @Richard Mayhew:

    Basically the CBO is projecting that people who otherwise could afford to retire but could not get health insurance until they qualified for Medicare will retire or otherwise get out of the labor market.

    Wait – so the CBO numbers say “people who are retirement age will be able to retire and open up jobs for younger people” and the Times spins that as “millions of people out of work due to Obamacare”?

    Why the FUCK do we even have a Fox News in this country?

  15. 15.

    ralphb

    February 4, 2014 at 2:54 pm

    Obvious anagram Reince Preibus must be the headline writer for most of the MSM. It would not surprise me to find the reporters had not actually read the CBO report but were reporting on some Republican press release.

  16. 16.

    ? Martin

    February 4, 2014 at 2:54 pm

    @elm:

    That is: PEOPLE WILL NO LONGER BE FORCED TO WORK IN ORDER TO AFFORD HEALTH CARE.

    This is very important. One way to higher employment is to reduce the number of hours people work. The US is a little bit of an outlier in that we are extremely productive compared to most other countries, but we don’t benefit from lower hours. If workers could afford more time away from work (we work about 500 hours a year more than Germans – about 3 months worth of labor) then employers would need to hire more to meet demand.

    Any time you increase worker security, they choose to work less. That creates unmet labor supply, which creates hiring.

  17. 17.

    Yatsuno

    February 4, 2014 at 2:56 pm

    @Mnemosyne (iPhone):

    Are Boomers really supposed to stay in the workforce past age 65 just to make people feel better about the workforce participation rate?

    I’m trying to figure out how this has any effect at all. One of the biggest blocks to upward mobility in a lot of companies is the people above them just. aren’t. retiring. Once they start dropping out, I would think there would be a huge number of promotions which open up lower positions which means college students can actually GET jobs which opens up other jobs and the chain goes on. What am I missing here?

  18. 18.

    elm

    February 4, 2014 at 2:56 pm

    @? Martin: Creates hiring and puts an upward pressure on wages too. I think I know why the establishment press is so negative about the concept.

    @Yatsuno:

    What am I missing here?

    Scaremongering gets more clicks. Older people watch TV news and buy newspapers, so it’s profitable and easy to frighten them.

  19. 19.

    Roger Moore

    February 4, 2014 at 3:06 pm

    @Comrade Jake:

    Why does the GOP want to delay the risk corridors for a year?

    Sabotage.

  20. 20.

    catclub

    February 4, 2014 at 3:08 pm

    @Mnemosyne (iPhone): This. There has been a flurry of postings that the drop in employment participation in 2008-9, that has stayed constant since then, was due
    in 2008 to unemployment, but stayed that way due to demographics, and was predicted in 2002 to occur.

  21. 21.

    Belafon

    February 4, 2014 at 3:10 pm

    @Davis X. Machina: We knew with them it was going to end up about haggling over the price.

  22. 22.

    Kylroy

    February 4, 2014 at 3:11 pm

    @Roger Moore: I’m tellin’ y’all.

  23. 23.

    Gindy51

    February 4, 2014 at 3:12 pm

    @Richard Mayhew: They also neglect to say that those jobs will be refilled by other workers when they retire or leave to start a business.

  24. 24.

    negative 1

    February 4, 2014 at 3:13 pm

    So anyone who says job losses is lying. The jobs aren’t leaving. People may leave the workforce, but the jobs remain. In other words:
    Obamacare leads to two million new hires.

    FTFY

  25. 25.

    Roger Moore

    February 4, 2014 at 3:17 pm

    @Bruuuuce:
    Just a revamp of the VRA to undermine all the Republican voter suppression tactics could do a lot to help the Democrats in the long-term. If you could add non-partisan redistricting, the Republicans would be in a world of hurt.

  26. 26.

    Baud

    February 4, 2014 at 3:20 pm

    CBO: Two Million Fewer Workers Due To Obamacare Death Panels

  27. 27.

    JCJ

    February 4, 2014 at 3:21 pm

    @Richard Mayhew:

    “Basically the CBO is projecting that people who otherwise could afford to retire but could not get health insurance until they qualified for Medicare will retire or otherwise get out of the labor market.”

    This is me exactly. I am 52 and could likely retire in six or seven years. Insurance would be impossible to buy for my wife (history of mental health issues with hospitalizations as well as bilateral breast cancer) without the ACA. Heck, I have a bad family history of heart disease and slightly elevated blood pressure so I probably couldn’t buy insurance beforer the ACA either. My daughter has lupus so insurance would have been an issue for her as well.

  28. 28.

    Davis X. Machina

    February 4, 2014 at 3:26 pm

    @Baud: Is that net jobs? Because even when mechanized, the creation of soylent green is a new industry. There will be some new hires.

  29. 29.

    Kay

    February 4, 2014 at 3:29 pm

    @elm:

    They already changed the whole thing. They said “jobs” but it should have been “workers” is the nut of the, um, GIANT ERROR.

    The race to get it out fast rather than getting it right will kill us all, I swear. I keep waiting for this to have huge and immediate consequences, like in some kind of national emergency.

    Locate your FEMA camp ahead of time, is all I can say. These people will be no help at all.

    As it is people understand absolutely nothing, so are constantly terrified :)

  30. 30.

    Roger Moore

    February 4, 2014 at 3:30 pm

    @Mnemosyne (iPhone):

    Are Boomers really supposed to stay in the workforce past age 65 just to make people feel better about the workforce participation rate?

    No. Boomers are supposed to stay in the workforce until they drop dead so we don’t have to raise taxes on rich people to pay back the money we borrowed from the Social Security trust fund.

  31. 31.

    David M

    February 4, 2014 at 3:41 pm

    Not that it really matters, because it’s not a real proposal, but the latest GOP health care reform proposal has this same “fewer workers” result.

    Now if they would just use this report to show the need to increase / improve the subsidies so that working more didn’t mean mean falling off a subsidy cliff, we might actually get somewhere.

  32. 32.

    OzarkHillbilly

    February 4, 2014 at 3:41 pm

    @Yatsuno:

    What am I missing here?

    The end of Obamacare. (which is the point of everything they do or say)

  33. 33.

    Kay

    February 4, 2014 at 3:45 pm

    Correction: February 4, 2014
    An earlier version of a headline accompanying this article on the home page was incorrect. The health law is projected to result in two million fewer workers, according to the Congressional Budget Office, not two million fewer jobs.

    More and more I think they just even it up. If Republicans have a bad week, then Democrats have to have one, too. Even-steven, fair and balanced, 50/50.

  34. 34.

    Baud

    February 4, 2014 at 3:49 pm

    @Kay:

    Correction: We are not real journalists.

  35. 35.

    ? Martin

    February 4, 2014 at 3:55 pm

    @Kay: At least we got the correction out of it. But kudos to the GOP for setting the narrative before the truth could work its way out there.

  36. 36.

    becca

    February 4, 2014 at 4:07 pm

    I think Thoreau liked to tend his garden in the morning so he could spend the rest of his day pondering, observing, just being.

    As the good Dr Seuss said “Just think of the thinks we could think!”.

  37. 37.

    Kay

    February 4, 2014 at 4:10 pm

    @Baud:

    Well, yeah, words matter. I’m still marveling over what Republicans managed to do with the word “targeting” in the ridiculous IRS fake-scandal. It seems pretty important if one is “targeting” a certain kind of tax status as opposed to a certain flavor of group relying on that status, but we just rolled with “targeting” and attached all kinds of nefarious meaning and intent to that one word.

    If “targeting” is a crime, the IRS should be completely outlawed. All they do is “target” one would hope. Presumably they’re not just wandering around rifling thru tax papers randomly even if that would be like rolling dice and thus “fair”.

  38. 38.

    steve

    February 4, 2014 at 4:40 pm

    On the left tail there are folks on Medicaid who didn’t work/work more because that would have caused them to lose their health insurance who now, with the expansion of eligibility up to 130% of FPL, will able to work.

    Anyway I hope the right wing keeps complaining about how means-tested healthcare produces perverse incentives; I know an alternative that wouldn’t…

  39. 39.

    Roger Moore

    February 4, 2014 at 4:47 pm

    @steve:

    Anyway I hope the right wing keeps complaining about how means-tested healthcare produces perverse incentives

    Of course a big part of what this is about is how our current practice of age and employment based testing creates its own set of perverse incentives, and eliminating those perverse incentives will change the job market. It’s just that we’re so used to living with the way things were that people find it strange to see older people retiring before Medicare age rather than continuing to work only so they have access to an employer-sponsored health plan.

  40. 40.

    Mnemosyne

    February 4, 2014 at 5:15 pm

    @Yatsuno:

    Honestly, I think that’s what Big Bidness is upset about — if the workers who are desperately hanging onto their jobs for the health benefits quit or retire, then companies have to hire new employees to replace them, train them, pay them, etc. It will become a worker’s job market, not a boss’s job market, and workers will be able to start making demands because there will be a demographic labor shortage.

    No wonder they’re fighting PPACA with everything they have. We have a historically unusual number of people in the workforce, and companies don’t want to give that up.

    ETA: I’d be curious to see if there are any predictions about what the workforce participation rate will be once the Boomers retire, but I don’t know if anyone is looking at those numbers or has determined what a “good” number would be.

  41. 41.

    JaneE

    February 4, 2014 at 5:58 pm

    My right wing nut job of a congressman is already out with a newsletter saying Obamacare will kill 2 million jobs. He is too stupid to know the difference between being fired or not being able to find work and choosing not to work.

  42. 42.

    dww44

    February 4, 2014 at 7:08 pm

    @Richard Mayhew: Please, Please , Richard, can you provide clarifying and counter information to the 2nd lead story on tonight’s CBS evening news about these effects of Obamacare: that 2 million people will leave the workforce, etc. CBS also said that the CBO said that many corporations who employ more than 50 people are going to move people to part-time in 2015 because of the mandate to provide health coverage.

    . Also CBS provided footage of Jon Cornyn (I do hope he gets primaried now and then whoever loses in the general) saying how awful is the ACA. from the Senate floor speaking about this very subject. There was nothing from Democrats to counter that meme. I was so angry. I did tell husband that the news director for CBS was hired away from Fox News and he poohed poohed me, and said I couldn’t handle anything critical of Obamacare.

    We need a voice on these national news media. We really do.

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