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Obamacare’s price tag has dropped 5 times in 5 years

The Obamacare debate has always been rife with myths, from the infamous "death panels" to the armed IRS agents that would arrest those who don't buy insurance (really, this was an actual myth).



But as the Affordable Care Act turns five, it appears one myth reigns above them all: the idea that the health-care law has gotten increasingly expensive over time.

A Vox poll conducted by communications firm PerryUndem shows that 42 percent of Americans think Obamacare has cost "more than expected." Only 5 percent got the right answer: that the Affordable Care Act has actually come in under budget, costing "less than what was estimated."

Yes, it's really true: Obamacare has come in under budget. Twice in the past year, the Congressional Budget Office has revised downward projected spending on the Affordable Care Act. In fact, the federal government is expected to spend less on health care now than it predicted in early 2010 — and those predictions didn't include any spending from Obamacare!

That isn't just about Obamacare — projections on what we'll spend on Medicare and Medicaid, the two other big federal health-care programs, went down, too. But it is pretty remarkable that health-care spending is now expected to be lower than projections made before Congress passed a massive health insurance expansion.

Forecasters have cut Obamacare's price tag five times since 2010

It happened for the first time in March 2011, a year after the health-care law passed.

first cbo chart


And then again in 2013 — and 2014.

cbo revisions


And already twice in 2015, the CBO has cut its expectations for how much the health-care law would cost.

cbo chart


What you see in all of these charts is that the estimated net cost of the Affordable Care Act has kept moving downward. Or as the budget wonks at CBO put it, "Estimates of the net budgetary impact of the ACA’s insurance coverage provisions have decreased, on balance, over the past four years."

These changes look tiny in a graph, but they're pretty significant: back in 2010, for example, forecasters estimated Obamacare's coverage expansion — the price of expanding Medicaid and private coverage, which accounts for the overwhelming majority of the law's spending — would cost $759 billion between 2014 and 2019 (a time frame covered by all three of the forecasts). But in April 2014, CBO revised its estimate to $659 billion — a 13 percent reduction.

Obamacare's subsidies are now project to cost 20 percent less than expected

CBO most recently revisited the health law's price tag earlier this month, and once again found the law would cost less than anticipated.

On March 9, the nonpartisan agency estimated that the federal government will spend 20 percent less than expected on subsidizing the coverage of low- and middle-income Americans who purchase coverage through the exchanges.

CBO also expects the federal government to spend less on Medicaid, the public program that covers low-income Americans and which the Affordable Care Act also expands. Medicaid spending will be $73 billion less than expected between 2016 and 2024.

The first reason Obamacare got cheaper: health costs are growing slowly

There are arguably two explanations for the Affordable Care Act essentially going on sale: a slowdown in the growth of health costs, and fewer people using the law than expected.

Typically, health-care costs grow really quickly, much faster than the rest of the economy. But since 2009, something unexpected has happened: health spending has grown at the same rate as everything else.

And that slowdown has been good for Obamacare's budget. When health-care costs grow more slowly, it's cheaper to buy millions of people health insurance.

There is a big debate in health policy right now about whether Obamacare has played a role in that slowdown — and whether the Obama administration can take credit for four years of record-low health-care cost growth. That debate is far from resolved, but what we do know for sure is that CBO analysts say this is the main reason they've reduced their forecasts on Obamacare spending. They attribute their March 2015 downward revision to "slower growth in premiums and, to a lesser extent, slightly lower exchange enrollment."

The second reason Obamacare got cheaper: fewer people signing up

This is happening in two ways.

First, there are 22 states not participating in Medicaid expansion after a Supreme Court ruling made it optional. Initially, this part of the law was supposed to be mandatory, so analysts assumed the federal government would be helping all 50 states buy public coverage for millions more Americans.

Now that the government is only helping 28 states and the District of Columbia expand Medicaid, it means it doesn't have to spend nearly as much money.

To a lesser extent, there's also been slightly lower-than-expected enrollment on the insurance marketplaces.

In its March 2015 estimates, the Congressional Budget Office reduced its estimates for how many people the exchanges will cover within the next decade from 25 million to 24 million.

Since's rocky launch in 2013, sign-ups have moved at a slightly slower pace than expected. This year, for example, the Congressional Budget Office had initially expected 12 million enrollees. Right now, the federal government estimates it has 11.7 million sign-ups.

Why does nobody know any of this?

Our new poll shows that of all of the Obamacare myths out there, the one about the law's price going up is the most pervasive. More of the public believes Obamacare's price has gone up, for example, than thinks there are death panels in the law (there aren't) or that undocumented workers can get financial help buying coverage (they can't).

What makes this myth especially pervasive? It might be that it feels intuitive: expanding coverage to millions of Americans just seems like an expensive endeavor. Most of us have had some experience buying insurance coverage, and we know it typically costs more than we want to pay. It seems like this would be true for the federal government, as well.

This also isn't a myth that gets debunked very much. There were lots of pieces written during the Obamacare debate about how death panels didn't actually exist. PolitiFact named death panels its "lie of the year" in 2009.

Because Obamacare's price-tag myth isn't as heated of a debate as the subject of death panels, it gets less attention in batting back rumors. So it lives on today, despite all evidence that it's wrong — and that Obamacare has, over the past five years, gotten significantly cheaper.

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