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CBO cuts PPACA exchange subsidy spending estimate

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The federal government may spend about $37 billion this year on public health insurance exchange subsidies and related programs, according to the Congressional Budget Office (CBO).

CBO analysts included that spending figure in a new budget outlook update.

In March, CBO analysts said the country would spend about $41 million on exchange plan subsidies and related costs, or about 10 percent more.

In 2014, the actual cost of the exchange programs was $15 billion.

The analysts have reduced their estimate of how much the programs will cost from 2016 through 2025 by about 0.6 percent from their estimate released in March 2015, to $880 billion. Between January 2015 and March 2015, the analysts cut their exchange program spending estimates about 20 percent because exchange plan enrollment has been growing more slowly than they originally assumed.

See also: Public exchanges have 10.2 million paid enrollees

The exchange spending figure includes the cost of premium subsidies, cost-sharing reduction subsidies, the temporary PPACA reinsurance program for fully PPACA-compliant individual health insurance, and the PPACA risk-adjustment program.

The analysts assume that reinsurance and risk-adjustment program revenue will offset program spending, keeping the programs from having any effect on the federal budget deficit.

The analysts classify spending for those programs as “mandatory outlays.”

They classify spending for a third PPACA program, the risk corridors program, as a discretionary program. But the analysts assume that the risk corridors program will also collect enough revenue to keep program outlays from affecting the federal budget deficit.

Elsewhere in the new report, analysts say revenue from PPACA-related fees and fines should help increase federal revenue from “other sources” by about 5 percent this year.

The analysts estimate that the federal government as a whole will run a $426 billion deficit this year on $3.3 trillion in revenue, compared with a deficit of $485 billion for 2014 on $3 trillion in revenue.

The share of the country’s total revenue, or U.S. Gross Domestic Product (GDP), flowing in to the federal government could increase to 18.2 percent of 2015 GDP, from 17.5 percent of 2014 GDP.

But analysts expect the federal deficit to amount to just 2.4 percent of 2015 GDP in 2015, down from 2.8 percent of 2014 GDP in 2014.

See also: CBO sees wider U.S. deficit as slower growth hurts revenue


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