The Congressional Budget Office's annual update on the federal balance sheet arrives Monday, and it appears spending on Medicare, Medicaid and the Affordable Care Act is contributing to a spike in the deficit.
It's an abrupt change. The yearly financial shortfalls had been dropping every year since 2009. As recently as last August, the CBO expected the gulf between taxes and expenses to continue narrowing in the near term.
But the nonpartisan federal budget agency attributed most of the country's $544 billion projected deficit in 2016 to the year-end budget deal that reduced corporate and individual taxes. Further, mandatory expenses will be $168 billion higher this year than last, according to a CBO summary released last week. Healthcare expenses, including the ACA's insurance subsidies, represent 62% of that increase.
The CBO will provide more details on the country's fiscal situation this week, and may elaborate further on the costs of the ACA. Last January, the CBO estimated the health insurance provisions of the law—including the premium and cost-sharing subsidies, as well as Medicaid expansion—would cost $100 billion less over the next decade than previously projected.
Several factors played into the downward revision. For example, many exchange shoppers have skipped out on cost-sharing subsidies because they are enrolling in cheaper bronze plans. But the CBO will likely revisit those assumptions.
“Some enrollees will switch from bronze plans to silver plans because they incur large medical bills or become concerned (perhaps because of outreach efforts by insurers or others) about the possibility of incurring large out-of-pocket payments,” the CBO analysis noted last year.