ECONOMIC REPORT OF THE PRESIDENT

(KFF 2016). Another fifth of traditional Medicare beneficiaries purchase
individual Medigap coverage and so will see a portion of the cost sharing
savings through lower cost sharing and a portion through lower premiums
for their Medigap plan. Around three-fifths of traditional Medicare beneficiaries
receive supplemental coverage through a State Medicaid program or
a former employer. In these cases, a portion of the cost sharing savings may
accrue to the sponsor of that supplemental coverage, although the extent to
which that occurs will depend on each individual’s particular circumstances.
Medicare beneficiaries will see savings in scenarios beyond those
considered here. Beneficiaries enrolled in Part D of Medicare are seeing substantial
additional cost sharing savings due to the combination of the ACA’s
provisions closing the coverage gap, which were discussed earlier in this
chapter, and lower-than-expected prescription drugs costs. Those amounts
are not included here because cost sharing obligations vary among Part D
plans, which makes quantifying these savings more challenging. Similarly,
this analysis does not examine cost sharing obligations for Medicare
Advantage enrollees because the structure of cost sharing obligations in
Medicare Advantage varies from plan to plan. In general, however, lower
health care costs will tend to reduce cost sharing obligations for Medicare
Advantage enrollees as well.
A Better Long-Term Fiscal Outlook
Federal and State governments finance a substantial fraction of health
care spending in the United States, primarily through the Medicare and
Medicaid programs, so reductions in health care costs also generate major
savings in the public sector. Indeed, in large part because of the ACA’s
provisions reducing health care spending over the long term, the law has
generated major improvements in the Federal Government’s fiscal outlook,
as depicted in Figure 4-47. CBO estimates imply that the ACA will reduce
deficits by more than $300 billion over the 2016-25 period (CBO 2015a).40
Those savings grow rapidly over time and average 1 percent of GDP—
around $3.5 trillion—over the subsequent decade.
The slowdown in health care cost growth more broadly has led to
additional large improvements in the fiscal outlook. Between August 2010
and August 2016, CBO reduced its projection of net Medicare spending
40 CBO (2015a) estimates how repealing the ACA would affect the deficit. CBO notes that the
deficit increase due to ACA repeal is not exactly equal to the deficit reduction due to the ACA’s
enactment. Most importantly, CBO assumes that, even if the ACA were repealed, reductions in
Medicare payment rates that have already been implemented under the ACA would remain in
place. CBO estimates that these payment rate reductions will generate savings of $160 billion
over the 2016-2025 period. Thus, the estimates presented in Figure 4-47 likely understate the
deficit reduction attributable to the ACA’s enactment.
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