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CBO: Lower Premiums to Cut ‘Obamacare’ Costs

Washington — The health-care law’s expansion of insurance coverage will cost $104 billion less than projected over the next decade, according to revised estimates from nonpartisan budget analysts Monday. The lower costs are attributable to premiums that will be cheaper than expected.

The Affordable Care Act’s coverage provisions in 2014 are expected to cost $5 billion less than the $41 billion the Congressional Budget Office and Joint Committee on Taxation projected earlier in the year. The CBO now expects the federal government to spend about $164 billion less in the next decade on subsidies in health insurance marketplaces. The CBO’s expected costs for the Affordable Care Act’s coverage provisions have declined since it was signed four years ago.

The CBO report points out that it had thought the exchange plans would look more like employer-based coverage, but that has not turned out to be the case, hence, the cheaper premiums. “The plans being offered through the exchanges this year appear to have, in general, lower payment rates for providers, narrower networks of providers, and tighter management of their subscribers’ use of health care than employment-based plans,” the CBO wrote.

Already, there is some pushback on how narrow the 2014 health plans have been, so the networks and, by extension, premiums will look different 10 years from now. The CBO said it expects exchange plans will start to look more like employer plans when exchange enrollment ticks up in future years.