By 2030, total subsidies are estimated to be $1.4 trillion, also 4.4% of GDP. (Photo: Shutterstock)
Net federal health insurance subsidies for Americans under age 65 are expected to total $920 billion next year, according to the latest report from the Congressional Budget Office and the staff of the Joint Committee on Taxation.
The federal government subsidizes health insurance for most Americans in this age group through various programs and tax provisions. The report describes updated baseline projections of the federal costs associated with each kind of subsidy and the number of people with different types of health insurance:
- Medicaid and the Children's Health Insurance Program account for about 45% of the federal subsidies annually during the period;
- Subsidies for employment-based coverage, about 35%;
- Payments for Medicare, about 15%; and
- Subsidies for coverage obtained through the marketplaces established by the Affordable Care Act or through the Basic Health Program, about 5%.
The projected total for 2021 is 4.4 % of gross domestic product. By 2030, total subsidies are estimated to be $1.4 trillion, also 4.4% of GDP. During that 10-year period, total subsidies are expected to total $10.8 trillion. These estimates assume that current laws governing health insurance coverage and federal subsidies for that coverage remain in place.
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In an average month each year during that period, between 238 million and 241 million people are projected to have health insurance, mostly from employment-based plans. Between 31 million and 32 million people are expected to be uninsured.
Since the last baseline projections were issued, the coronavirus pandemic has disrupted the economy, and millions of jobs have been lost. Compared with March 2020 estimates, current projections show about one million more people uninsured in 2021, largely reflecting the effects of the pandemic. In the projections for the next few years, the loss of employment:
- Decreases estimated enrollment in and subsidies for employment-based insurance;
- Increases estimated enrollment in and subsidies for Medicaid and CHIP; and
- Increases, on net, the number of people estimated to be uninsured.
Legislative responses to the pandemic have, among other things, temporarily increased the share of Medicaid and CHIP costs paid by the federal government; allowed Medicaid and CHIP enrollees to remain enrolled through the end of the public health emergency regardless of changes in income; and provided forgivable loans and tax credits to businesses to help them retain employees. These laws have increased enrollment in Medicaid, as well as the average cost of Medicaid, and lessened the decline in employment-based insurance, according to the report's writers.
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Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
