The Congressional Budget Office (CBO) released the fourth year report on projections of the cost of the Affordable Care Act. The news is good and consistent with the trend over the previous four years: CBO now projects $104 billion less in costs under the Act than it did last year. The reduction in costs is due to a variety of factors but two big ones stand out. First, plans being offered under the health exchanges have significantly lower premiums that were originally anticipated, largely a result of narrower networks of providers and tighter management of health care in the plans – a trade-off that has resulted in big savings. Second, all health costs – both in government programs like Medicare and Medicaid and in the private sector – are projected to grow more slowly than just last year. The CBO points out that this is becoming a trend:
A notable influence is the substantial downward revision to projected health care costs both for the federal government and for the private sector. For example, since early 2010, CBO and JCT have revised downward their projections of insurance premiums for policies purchased through the exchanges in 2016 by roughly 15 percent, and CBO has revised downward its projection of total Medicaid spending per beneficiary in 2016 by roughly half that percentage.