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The U.S. federal government will probably spend about $7.2 trillion on subsidies for employer-sponsored health coverage from this year through 2036, according to a new Congressional Budget Office analysis.
Phillip Swagel, the CBO director, and other CBO officials included federal subsidy data in a slidedeck for a presentation they gave Monday at a briefing organized by the Paragon Health Institute.
The attendees were people who work for U.S. senators and for members of the U.S. House of Representatives.
The employer plan subsidies could account for 21% of the $33.5 trillion in projected federal health insurance subsidy spending over the 11-year period included in the chart.
CBO analysts expect the employer plans to cover an average of about 169 million people per year.
Two big government programs for low-income people, Medicaid and the Children's Health Insurance Program, may get only a little more federal subsidy support — $8.4 trillion — but they will cover just 73 million people.
The federal government may spend an average of $3,873 on subsidies per year per employer plan enrollee over the 11-year period included in the CBO projections, or 37% of the $10,461 average for Medicaid and CHIP enrollees.
The backdrop: Members of Congress are always working on health care spending legislation, and some think they may be drafting a "Secure 3.0" package.
The Secure 3.0 package would be a sequel to the Setting Every Community Up for Retirement Enhancement Act of 2019 and the Secure Act's sequel, the Secure 2.0 Act of 2022.
The Secure 3.0 package could include provisions that would affect 401(k) plans, individual retirement accounts and other retirement savings and investment arrangements.
The Secure 3.0 package could also end up including provisions that will affect employer-sponsored health benefits, such as health savings accounts or individual coverage health reimbursement arrangements.
What it means: Lawmakers and their aides could have the CBO health insurance subsidy spending projections in mind when they think about any Secure 3.0 provisions that could increase, decrease or restructure spending on employer health plan subsidies.
The projections could help explain why some popular proposals, such as efforts to make HSAs or ICHRA plans easier to use, may have trouble getting through Congress.
Presentation details: The CBO employer plan subsidy projections include the cost of the federal income tax exclusion for employment-based health coverage, which is expected to be $471 billion this year.
The projections also include the cost of the income tax deduction for self-employment health insurance, which will be $7 billion this year.
The federal government could spend about $16 trillion on Medicare subsidies, or $21,029 per enrollee per year, and $1.2 trillion on Affordable Care Act premium tax credit subsidies for individual and family coverage, or $5,652 per enrollee per year.
The $33.5 trillion projected total for all forms of federal health insurance subsidy spending would amount to 7.8% of U.S. gross domestic product.
GDP is a measure of national income. Federal government economists think the United States will report $32 trillion in GDP for 2026.
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