Fiscal Fact Checker: What Has Happened to CBO's Estimate of the Affordable Care Act?

CBO's most recent estimate of the insurance coverage provisions of the Affordable Care Act has sparked a debate about how CBO's estimate of ACA has changed over time. Some lawmakers (see here for example) claim that CBO's cost estimate has doubled in the two years since the bill's passage, while others claim that the bill's cost is now lower than we previously thought (see here and here). Let's examine these competing claims.

The recent claim arguing that costs have doubled cites the gross cost of coverage provisions as CBO estimated in 2010 and 2012: $938 billion and $1.76 trillion, respectively. However, the time windows differ: the initial estimate covered 2010 through 2019, while the latest estimate covers 2012-2022. Since most of the law's provisions don't kick in until 2014, the 2012 estimate includes three additional years where the coverage provisions are fully in effect. With that three-year shift in the projection window, one would expect the ten-year cost to increase significantly.

Also, we would quibble with using the gross cost, since it is a less comprehensive measure than the net cost estimate given that the bill also included penalties on people who do not have insurance or employers who do not provide it to help reduce costs (and these policies are closely related to the coverage expansions). When looking at net costs and using a common projection window (2012-2019), the cost of the coverage provisions has remained roughly the same in the two estimates.

The table below shows this comparison, along with the two other estimates that CBO did in February 2011 (the repeal of the health care law, HR 2) and in March 2011.

CBO's Estimate of the Net Cost of the ACA Coverage Provisions (billions)
  2012 2013 2014 2015 2016 2017 2018 2019 2012-2019
March 2010 $9 $10 $49 $87 $132 $154 $164 $172 $778
February 2011 $6 $9 $55 $92 $131 $149 $145 $146 $733
March 2011 $9 $9 $59 $104 $142 $157 $155 $158 $793
March 2012 $3 $5 $58 $110 $143 $154 $150 $149 $772

The second claim that the bill's costs are now lower is based on the difference between the March 2012 and March 2011 estimates over the comparable period of 2012-2021. The 2011 estimate projected the cost of the coverage provisions to be $1.13 trillion, while the newest estimate projects a cost of $1.08 trillion. Thus, using the comparable budget window and net cost, that claim is correct.

Overall, the cost of the Affordable Care Act has not doubled since its initial estimate two years ago; in fact, it has remained roughly the same when you use a comparable projection window. Also, the cost of the coverage provisions has declined by about $50 billion since the last estimate in March 2011. Still, all of the noise about the most recent estimate comes with the caveat that there still has not been an updated full score of Afforable Care Act since last year. Until that happens, a lot of the talk about its budgetary effects could be much ado about nothing. 

As CBO said in a comment about their estimate:

For the provisions of the Affordable Care Act related to health insurance coverage, CBO and JCT’s latest estimates are quite similar to the estimates we released when the legislation was being considered in March 2010.