Jim Capretta: CBO Confirms It: ObamaCare Creates an Unstable Disequilibrium in Insurance Subsidies

In March, the Congressional Budget Office (CBO) released a new studyon employee migration out of job-based plans and into ObamaCare’s state exchanges. The effect of ObamaCare on employer-based insurance has been a hotly debated topic ever since the law was enacted in March 2010. Several independent analysts predict that “dumping” into the exchanges will occur at a much higher rate than CBO assumed in its original estimates of ObamaCare and have argued that the result would be much higher federal costs than CBO estimated.

Perhaps not surprisingly, CBO used the release of its most recent assessment of the law’s impact on insurance arrangements to defend its original cost estimates and again argue that the law will, on a net basis, reduce future budget deficits. CBO’s latest estimates indicate that 3 to 5 million fewer workers will be in job-based insurance plans in 2019 to 2022 due to Obamacare’s incentives — a relatively small number compared to the nearly 160 million Americans who are expected to get their coverage from their place of work in the coming years. Moreover, CBO suggests that, even if migration out of employer plans is higher than what the agency is currently projecting, it won’t add much to the federal budget deficit because taxes would rise almost enough to fully offset any spending increase. Most news accounts dutifully reported these finding from CBO as the primary takeaways of the study.

But there’s actually a whole lot more to this story than that.

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