Those who believe Obamacare is finally gaining traction are probably feeling vindicated this week, as the Congressional Budget Office now says the ACA could be more than $100 billion cheaper than initially expected. As the NYT explains, premiums for ACA plans will be lower than the CBO thought, so the government subsidies provided to help people pay their premiums will also go down. The CBO report lists one key reason why premiums are expected to be lower than originally predicted:
A crucial factor in the current revision was an analysis of the characteristics of plans offered through the exchanges in 2014. Previously, CBO and JCT had expected that those plans’ characteristics would closely resemble the characteristics of employment-based plans throughout the projection period. However, the plans being offered through the exchanges this year appear to have, in general, lower payment rates for providers, narrower networks of providers, and tighter management of their subscribers’ use of health care than employment-based plans do.
You can’t escape tradeoffs. If the new outlook is accurate, the savings are mounting as networks are narrowing—something history tell us consumers very much dislike. Moreover, the CBO report says that the narrow networks to come in 2014 may not be sustainable. By 2016 many more people will get insurance through the ACA. Networks will have to open up again, because insurers won’t be able to take on more customers without also increasing the number of providers available to serve those customers. This will lead back to higher premiums. We see here, as we’ve seen time and time again, that partial information and temporarily hidden tradeoffs are helping to keep the ACA’s beleaguered PR campaign afloat.