Report: Delay of certain ACA requirements to cost feds $12 billion more than projected

The Obama administration’s recent announcements and final rules regarding the implementation of the healthcare law—including a one-year delay of the healthcare reform law’s employer mandate—is estimated to increase the law's net cost to the federal government by $12 billion over 10 years, the nonpartisan Congressional Budget Office and Joint Committee on Taxation announced Tuesday. A relatively modest cost increase was predicted when the mandate delay was announced.

House Budget Committee Chairman Paul Ryan (R-Wis.) had requested that the CBO and JCT assess the effects of the July decision to postpone for one year the law’s provision that large employers provide insurance to their workers or pay a penalty, as well as the corresponding delay in two reporting requirements under the law. In a six-page report, the CBO noted that its May 2013 baseline projections had estimated the Patient Protection and Affordable Care Act’s insurance provisions would cost the federal government about $1.36 billion between 2014 and 2023. After the Treasury department’s recent announcement, the CBO recalculated those projections and now estimates the insurance coverage measures in the law will cost the federal government about $1.375 billion over that same 10-year period.

The largest change, the CBO-JCT report noted, is a $10 billion reduction in penalty payments by employers that would have been collected in 2015 for the 2014 coverage year. Costs for federal subsidies to individuals and families on the state insurance exchanges are projected to increase by $3 billion, because some people who would have received employer coverage instead will opt for subsidized exchange coverage. The CBO and JCT also estimate that other small changes—including an increase in taxable compensation stemming from fewer people enrolling in employer-based coverage—will offset those increases by $1 billion.

Meanwhile, the CBO and JCT noted that as a result of announced changes and final rules, about 1 million fewer people are expected to be enrolled in employment-based coverage in 2014 than what the CBO had previously projected. That will produce a projected $1 billion increase in tax collections, partly offsetting the spending increases.

“Of those who would otherwise have obtained employment-based coverage, roughly half will be uninsured and the others will obtain coverage through the exchanges or will enroll in Medicaid or the Children’s Health Insurance Program,” the report said.

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