Obamacare subsidies on track to cost billions this year, report says

The large subsidies for health insurance that helped fuel the successful drive to sign up approximately 8 million Americans for coverage under the Affordable Care Act are on track to cost billions of dollars this year, a new federal report indicates.

Nearly nine in 10 Americans who bought healthcare coverage on the federal government’s healthcare marketplaces received government assistance to offset their premiums.

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FOR THE RECORD

June 18, 10:30 a.m.: Because of an error in calculations, a previous version of this article incorrectly stated that a new federal report indicates that the cost of insurance subsidies under President Obama’s healthcare law may be running above current projections. The figures in the report actually suggest that the cost of the subsidies is roughly in line with current projections from the Congressional Budget Office.

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That assistance helped lower premiums for consumers who bought healthcare coverage on federal marketplaces by 76% on average, according to the new report from the Department of Health and Human Services.

Premiums that normally would have cost $346 a month on average instead cost consumers just $82, with the federal government picking up the balance of the bill.

Though the generous subsidies helped consumers, they also come at a price.

The report, though missing data from some states, paints one of the fullest pictures to date of the actual cost of the 2010 healthcare law’s coverage expansion.

It suggests that the federal government is on track to spend at least $11 billion on subsidies for consumers who bought healthcare plans on marketplaces run by the federal government, even accounting for the fact that many consumers signed up for coverage in late March and will only receive subsidies for part of the year.

That total does not count the additional cost of providing coverage to millions of additional consumers who bought coverage in states that ran their own marketplaces, including California, Connecticut, Maryland and New York. About a third of the 8 million people who signed up for coverage this year used a state-run marketplace.

Federal officials said subsidy data for these consumers were not available.

If these state consumers received roughly comparable government assistance for their insurance premiums, the total cost of subsidies could top $16.5 billion this year. Making precise estimates is difficult because of expected fluctuations in enrollment over the year.

That total would be approximately in line with projections from the nonpartisan Congressional Budget Office.

The state-based marketplaces -- a centerpiece of the Affordable Care Act -- enable Americans who do not get healthcare coverage at work to select among plans that offer at least a basic set of benefits. The plans cannot turn away sick people.

Consumers who make less than four times the federal poverty level, or about $94,000 a year for a family of four, qualify for subsidies to offset the cost of their premiums in most places.

Obama administration officials Tuesday focused on the availability of affordable coverage for millions more consumers.

“What we’re finding is the marketplace is working. Consumers have more choices, and they’re paying less for their premiums,” Health and Human Services Secretary Sylvia Burwell said in a statement.

Officials who worked on the report refused to speak on the record or discuss the potential effect of the subsidies on the long-term cost of the healthcare law.

Although the law’s costs have thus far been lower than projected, some experts question whether the subsidies will be sustainable.

The Congressional Budget Office estimated in April that the annual cost of subsidies will rise to $23 billion next year and $95 billion in 2024, although the budget office continued to project that all the law’s costs will be offset by additional revenue it raises and by cuts in other federal healthcare spending.