United States: Latest CBO Estimates Show Insurance Coverage Growth Under The ACA Due To Medicaid And CHIP Enrollment Nearly Doubling

On March 24, 2016, the Congressional Budget Office (CBO) released a report, Federal Subsidies for Health Insurance Coverage for People Under Age 65: 2016 to 2026, that provides a treasure trove of information about the growth in federal spending for health insurance.1 CBO also released a series of baseline projections for various federal programs, including Medicare, Medicaid and tax subsidies for individual private insurance purchased through the federal and state marketplaces. These baselines are used to score legislation, making them a vital resource to the public as well as to Congress.

Coincidentally, March 23 marked the six-year anniversary of the Affordable Care Act (ACA). CBO's original estimates of the impact of the ACA on overall health insurance coverage by 2016 were relatively close to its current projections. Specifically, in 2010 CBO estimated that, under the ACA, the number of non-elderly individuals without health insurance in 2016 would drop from 52 million to 22 million. The agency now estimates the number of uninsured dropped significantly, to 27 million. However, the source of coverage is dramatically different from CBO's original estimates.

Coverage has peaked at 90 percent and will remain constant through 2026

CBO estimates that 244 million people, 90 percent of all US residents, now have health insurance coverage. The agency predicts that this level will be maintained over the next decade, with the number of uninsured essentially holding steady at around 27 million people. Table 1 of the Federal Subsidies baseline2 shows the number of Americans under age 65 receiving health insurance coverage from various sources in 2016, as well as CBO's predicted figures for 2026:

  2016  2026 
Total Population Under Age 65  272 million
280 million
Employment-Based Coverage
155 million
152 million
Medicaid and CHIP
68 million
71 million 
Basic Health Program

1 million

1 million

Nongroup Coverage
22 million
25 million
Subsidized through ACA Marketplaces
10 million
14 million
Unsubsidized through ACA Marketplaces
2 million
4 million
Purchased outside ACA Marketplaces
9 million
7 million
Medicare 9 million 9 million
Other Coverage
5 million
6 million
Uninsured 27 million
28 million

Sources of coverage are dramatically different from 2010 estimates

On March 11, 2010, prior to passage of the ACA, CBO released a letter to then-Senate Majority Leader Harry Reid (D-NV) that provided the direct spending and revenue estimates for HR 3590, the Patient Protection and Affordable Care Act, as it had been passed by the Senate the previous December.3 Shortly after the Reid letter was released, the ACA (of which HR 3590 was the largest part) was signed into law by President Obama. 

It is interesting to compare the coverage estimates in the Reid letter to the March 2016 baseline. Table 3 of the Reid letter provided CBO's estimates of coverage without the ACA and the estimated effects of the insurance coverage provisions contained in HR 3590. Here is how coverage in 2016 compares to the estimates provided six years ago:


  2010 baseline
for 2016
2010 predictions
with ACA for 2016
2016 baseline 
Total Population Under Age 65  277 million N/A 272 million
Employment-based Coverage
162 million 158 million 155 million
Medicaid and CHIP  35 million 51 million 68 million 

Nongroup and Other Non-Marketplace Coverage
(includes Medicare and Basic Health Program)

29 million 24 million 24 million
ACA Marketplaces N/A 22 million 12 million
Uninsured 52 million 22 million 27 million
Percent Insured 81.2% 92% 90%

Medicaid covers 17 million more people in 2016 than original projections

Perhaps the most surprising finding is that Medicaid and the Children's Health Insurance Program (CHIP) cover 17 million more people in 2016 than projected, while private insurance through the non-group market, including exchanges (now called marketplaces), covers 10 million fewer people. Millions of young, healthy people are enrolled in Medicaid and CHIP, rather than in private insurance offered through the exchanges.

Bear in mind as well that the Medicaid expansion was mandatory when CBO scored the HR 3590, so this dramatic growth in Medicaid is only partially related to the ACA. In 2010, Medicaid and CHIP covered 40 million non-elderly people. Enrollment in these programs (ignoring ACA-related increases) was supposed to fall to 35 million under CBO's 2010 baseline projections. Rather, in the past six years Medicaid and CHIP enrollment has nearly doubled from the 2010 baseline. Medicaid enrollment overall is higher now than in January 2014, even in states that declined to expand the program. CBO estimates that only 11 million of the 68 million individuals on Medicaid and CHIP were made eligible by the ACA. Since the ACA only provided funding relief for those made eligible for Medicaid under that law, the enrollment increases have required states to find ways to finance the non-federal share of the program, exacerbating state financing challenges.

Summary

The higher Medicaid enrollment figures in the new CBO baseline have implications for many health care stakeholders. Health plans that were planning for greater participation in the marketplaces must shift expectations. Many of their potential customers, who are overwhelmingly young and healthy, are enrolled in Medicaid.

Higher than expected Medicaid enrollment reflects a slow economy and continues to put pressure on states and their partners, particularly providers. Until a better economy lifts more Americans out of poverty or near-poverty levels, states and their partners will need to find new ways to finance the program or lower costs through delivery system reform. Dentons can help design solutions and waivers to meet the Medicaid financing and policy challenges states face.

Footnotes

1. Congressional Budget Office, Federal Subsidies for Health Insurance Coverage for People Under Age 65: 2016 to 2026 (March 2016), available at https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/51385-HealthInsuranceBaseline.pdf

2. Congressional Budget Office, Federal Subsidies for Health Insurance Coverage for People Under Age 65: Tables From CBO's March 2016 Baseline (March 2016), available at https://www.cbo.gov/sites/default/files/51298-2016-03-HealthInsurance.pdf

3. Letter from Congressional Budget Office to Senator Harry Reid (March 11, 2010), available at http://www.cbo.gov/sites/default/files/reid_letter_hr3590.pdf (the "Reid letter")

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