CBO: ‘Less attractive’ exchange plans cut Obamacare cost estimate

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The Congressional Budget Office cut its cost estimate of Obamacare’s coverage provisions from $1.5 trillion to just under $1.4 trillion Monday, citing lower total spending on exchange subsidies due to the exchanges’ narrow networks and limited services.

The $104 billion savings through 2024 is largely due to lower-than-projected subsidy costs, which are the result of “somewhat less attractive” plans offered on the exchanges, the budget office found. Narrow networks, lower provider payments, and tighter management of the actual use of health care services on exchange plans are to thank for the premium decreases.

Premiums and subsidy payments will rise over the next several years, however. The CBO and the Joint Committee of Taxation (JCT) expect the exchanges’ provider payments to remain lower and networks to remain narrower than in the private market, but will be forced to become more attractive in order to keep some customers.

“That pattern will put upward pressure on exchange premiums over the next couple of years,” CBO reported, “although CBO and JCT anticipate that the plans’ characteristics will stabilize after 2016.”

While the budget office predicts that market-based alternatives will continue to provider higher-quality coverage than Obamacare exchanges, they recognize that they’ll shrink significantly as a result of the health care law.

Employer-based coverage will decrease by 7 million by 2024, to 159 million individuals, and nongroup coverage will be down 5 million, bringing the total to just 22 million. While exchange coverage typically provides fewer options, whether through hospitals and providers being out of network or doctors refusing to accept lower provider payments, subsidies will nevertheless attract new customers.

Exchanges are expected to provide insurance to 25 million people, while Medicaid and CHIP are slated to expand coverage by 13 million, bringing their total share of the population up to 48 million individuals.

The CBO’s downward estimate may be good news on the surface for Obamacare supporters, but in the end, the savings come to a large extent from reduced quality care.

The nation’s best cancer hospitals are overwhelmingly not covered by plans in their states’ Affordable Care Act marketplaces, according to a recent AP survey. Just four of the 19 top comprehensive cancer centers are in-network for all state insurance plans, despite cancer being the standard disease used to argue for Obamacare: an unexpected catastrophe that can leave unsuspecting Americans with thousands in medical bills. With most cancer centers out-of-network, it’s unlikely most who find themselves in such a situation would be able to seek proper treatment.

One top hospital, Washington’s Seattle Children’s Hospital, is upset enough that it’s suing that the state’s insurance commissioner after being excluded from five of seven plans on the state-run exchange. In the meantime, Seattle Children’s is reportedly paying out of its own pocket to care for some 200 children whose insurance coverage now excludes the state’s top hospital.

The report did not adjust the last comprehensive cost analysis of the entire health care law. The last complete report from July 2012 found that Obamacare would reduce federal deficits.

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