A permanent extension to expiring tax credits to recipients of Obamacare health plans could boost the number of people with health insurance but would add $350B to the U.S. budget deficit over the next ten years, the Congressional Budget Office said Thursday.
Its findings come as the enhanced subsidies that reduced health premiums of millions of enrollees who purchased health plans through the Affordable Care Act (ACA) marketplace are set to lapse at the end of 2025 if Congress fails to act.
The tax credits introduced in 2021 as part of the American Rescue Plan Act pandemic-relief law and then extended through the Inflation Reduction Act in 2022 could expand the U.S. budget deficits by $349.8B from 2026 to 2035, if they are permanently extended, CBO added.
However, the subsidies could also boost the number of insured Americans by 3.6M and 3.8B in 2030 and 2035, respectively, CBO said, citing its health insurance simulation model. Additionally, the agency estimated that if the permanent extension takes effect on Sept. 30, premiums for the 2026 plan year could decline by 2.4% from its baseline projections.
The CBO projected in June that more than 4M Americans will become uninsured in 2034 if enhanced subsidies are allowed to lapse this year.
Operators in the ACA Marketplace include managed care organizations UnitedHealth (NYSE:UNH), CVS Health (CVS), Centene (NYSE:CNC), Cigna (CI), Elevance Health (NYSE:ELV) and Oscar Health (NYSE:OSCR)
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