How Obamacare Will Save The Federal Government $190 Billion
Lower than projected premiums under the Affordable Care Act will save the federal government $190 billion over 10 years and increase the laws deficit reduction by 174 percent to almost $300 billion, a new analysis from the Center for American Progress has found. The report, from Topher Spiro and Jonathan Gruber, bolsters President Obamas claims on Monday that despite the ongoing technical problems surrounding HealthCare.gov, the product of the Affordable Care Act for people without health insurance is quality health insurance thats affordable.
In fact, the emergence of new insurers and increased competition within the laws marketplaces has lowered premiums below Congressional Budget Office (CBO) projections from March of 2012. While the nonpartisan office estimated that the average second-lowest-cost individual silver plan premiums would cost $4,700 in 2014, the actual average premium turned out to be $3,936 or 16 percent lower than projected. The savings are significant because the law pegs its tax credits to the cost of the second-lowest silver plan. If premiums for that plan are lower, then the cost of tax credits will also be lower, the report argues. Here is why:
Consider a typical individual making $30,000 a year. That individuals premium contribution would be capped at 8.37 percent of income, or $2,512. If the premium for the second-lowest-cost silver plan is $4,700, then the tax credit would be the difference between this premium and the individuals contribution, or $2,188. But if the premium for the second-lowest-cost silver plan turns out to be only $3,936, then the tax credit would be $1,424.
[A] 16 percent reduction in premiums will lower the total cost of tax credits by about 21 percent or $190 billion dollars, Spiro and Gruber calculate. They also note that lower premiums will make insurance more affordable for the uninsured, expanding coverage to an additional 700,000 people.
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http://thinkprogress.org/health/2013/10/23/2821251/obamacare-save-federal-government-190-billion/
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