OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has released a briefing that reviews the Congressional Budget Office’s (CBO) updated budget projections on the Patient Protection and Affordable Care Act’s (ACA) costs and labor-market effects. The estimated 2016-2025 cost of the ACA has been revised to $1.207 trillion from the January 2015 estimate of $1.350 trillion, a reduction of $142 billion or 11%.
The CBO’s projections also include a slowdown in the growth of health care costs and a reduction in the enrollment through individual exchanges, to about 11 million from 12 million in 2015 and to 22 million from 24 million through 2025. Additionally, seven million people are predicted to lose job-based coverage by 2025, down from nine million. The Best’s Briefing, titled, “Updated Government Estimates Temper Impact From Affordable Care Act,” states that A.M. Best believes the lower rate of health care cost growth is a result of a number of factors, including higher share of out-of-pocket costs, sophisticated medical management, a significant increase in generic drug use and numerous wellness and consumerism initiatives.
A.M. Best has stated previously that the initial implementation of the ACA has had a smaller-than-anticipated impact on the industry. The CBO report illustrates that fundamental shifts in the market will be somewhat less significant than initially estimated, further postponing potential disruption. Overall, the slower transition to the individual market should be viewed as a positive factor for health insurers, since it allows for a more gradual transition and preserves opportunities to further utilize the existing business model centered on group coverage that proved to be profitable and administratively efficient for the industry.
For the full copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=234791.
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