By Emily Ethridge, CQ Roll Call
February 4, 2014 -- The Congressional Budget Office (CBO) recently estimated that 1 million fewer people will receive health insurance through the law's exchanges in 2014 than previously projected, mostly due to the troubled federal exchange website rollout.
In addition, CBO said in its annual budget outlook that the law (PL 111-148, PL 111-152) will lead to fewer hours worked by those in the labor force, a conclusion quickly seized upon by Republicans as proof that the law is harming the economy.
But in a blow to conservative Republicans, the CBO also said it expects that a risk corridor provision in the law that some Republicans have targeted for repeal would actually save the Treasury $8 billion from 2015 to 2024. However, CBO Director Douglas W. Elmendorf said repeal might not necessarily eliminate those savings because "repealing the risk corridor program could change the behavior of insurers, change the premiums they set, which would also affect enrollment and federal subsidy costs."
The CBO said in the new fiscal 2014 baseline that 6 million people will get coverage through the exchanges this year, down from its May 2013 estimate of 7 million. Of those, 5 million people are estimated to receive subsidies that will help them pay for their insurance.
The CBO cited "significant technical problems" in the initial phases of rolling out the federal exchange website as the reason for the drop in the estimate. But with those problems largely resolved, the agency projects a sharp increase in enrollment in the exchanges by the end of the current open enrollment period on March 31—and also over the next few years.
Beginning in 2017, between 24 million and 25 million people are expected to get coverage through the exchanges each year, and roughly 80 percent of those enrollees will receive subsidies, the CBO found. The federal government's spending on subsidies is expected to be $15 billion in 2014 and will rise to $143 billion in 2024, the report said.
The CBO also reduced, from 9 million to 8 million, its projected number of people enrolled in Medicaid and the Children's Health Insurance Program than would have been enrolled without the health care law.
Still, CBO said that the law will increase the number of nonelderly people with insurance by 13 million in 2014 and 20 million in 2015.
By 2024, about 31 million nonelderly Americans will remain without insurance, the CBO said—of which 45 percent are expected to have access to coverage and choose not to buy it, 30 percent are expected to be unauthorized immigrants, 20 percent will be Medicaid eligible but not enrolled, and 5 percent will be ineligible for Medicaid because the state did not expand coverage.
The CBO also found that roughly 1.5 million people in 2014 will keep coverage under policies that the administration allowed to continue even though they do not meet the law's requirements.
Republicans highlighted the portion of the report dealing with the labor market. The report found the law would have the effect of reducing the total number of hours worked by about 1.5 percent to 2 percent between 2017 and 2024. In August 2010, the CBO estimated a reduction of labor of about 0.5 percent.
That reduction in hours represents a decline of about 2 million full-time-equivalent workers in 2017, which will rise to about 2.5 million in 2024, the CBO found.
It added, "The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses' demand for labor, so it will appear almost entirely as a reduction in labor force participation and in hours worked relative to what would have occurred otherwise rather than as an increase in unemployment (that is, more workers seeking but not finding jobs) or underemployment (such as part-time workers who would prefer to work more hours per week)."
Republicans promoted the CBO's new estimate as evidence that the law will kill jobs. "Today's report by the nonpartisan Congressional Budget Office is further evidence the president's health care law is destroying full-time jobs," said House Education and Workforce Chairman John Kline, R-Minn., in a statement. "This fatally-flawed health care scheme is wreaking havoc on working families nationwide, forcing premium increases, policy cancellations, and job losses."
Because the law's requirement that most employers with 50 or more full-time employees offer health insurance or pay a penalty does not take effect until 2015, its effects have yet to be seen, the CBO found.
Although Republicans have said the law's regulations will prompt employers to hire part-time employees rather than full-time workers, the CBO found there is so far "no compelling evidence that part-time employment has increased as a result of the [law]."
The CBO estimated that the employers will pay a total of $151 billion in penalties between 2015 and 2024, and that the uninsured will pay $52 billion in penalties over that same time period.
The White House pushed back against Republican criticism of the law's effect on jobs.
"Claims that the Affordable Care Act hurts jobs are simply belied by the facts in the CBO report," White House Press Secretary Jay Carney noted in a statement.
He added, "At the beginning of this year, we noted that as part of this new day in health care, Americans would no longer be trapped in a job just to provide coverage for their families, and would have the opportunity to pursue their dreams. This CBO report bears that out, and the Republican plan to repeal the ACA would strip those hard-working Americans of that opportunity."
A senior administration official also noted that the law provides people more insurance options untied to their employer, which may drive some workers to "choose to supply a different amount of labor."
The official also said that the CBO report refutes some critics' claims that the law will lead to a net drop in businesses' demand for labor.
In total, the CBO said the law's coverage provisions will cost $41 billion in 2014 and $1.4 trillion over the 2015-2024 time period. That represents a reduction of $9 billion in the net cost of those provisions over a 10-year period compared to last year's projections.
The report also noted more than $8 billion in new savings from the law's risk corridor provision, a temporary program which requires insurers to pay money into the Treasury if their earnings surpass certain thresholds, while the government covers some of their losses if the opposite scenario occurs.
The office estimated payments to insurers will be $8 billion over 2015-2024, but collections from insurers will be $16 billion, for a savings of $8 billion. Last year, the office estimated the provision's payments and collections would roughly offset each other.
While Elmendorf said repeal would not necessarily eliminate the savings, CBO did not estimate the effects of repeal.
Republicans are debating whether to ask for a repeal of the risk corridor provision in exchange for increasing the debt ceiling later this month. House Speaker John A. Boehner, R-Ohio, recently said that no decision about how to deal with the debt ceiling had been made.