ECONOMIC REPORT OF THE PRESIDENT

Figure 4-47
Deficit Reduction Due to the Affordable Care Act, 2016–2035
Change in the Deficit (Billions)
0
-1,000
-$353 Billion
-2,000
-3,000
-4,000
Reduction of Around
$3.5 Trillion
-5,000
2016–2025 2026–2035
Note: CBO reports second-decade effects as a share of GDP. Amounts are converted to dollars
using GDP projections from CBO's long-term budget projections.
Source: Congressional Budget Office; CEA calculations.
under current policy in 2020 by $125 billion or 15 percent (CBO 2010a;
CBO 2016a).41 CBO has indicated that the reductions in its projections of
Medicare spending in recent years largely reflect the persistent slow growth
in health care costs (Elmendorf 2013). That $125 billion reduction in projected
spending constitutes 0.6 percent of CBO’s current projection of 2020
GDP.
The combination of the deficit savings directly attributable to the
ACA and the savings attributable to the broader slowdown in health care
costs have greatly improved the United States fiscal outlook. In its most
recent long-term budget projections, CBO estimated that the fiscal gap
over the next 30 years—the amount of deficit reduction required to hold
debt constant as a share of GDP over that period—was 1.7 percent of GDP
(CBO 2016b). Without the ACA and the additional reductions in projected
Medicare spending described above, the fiscal gap over this period would
41 For the purposes of this comparison, CBO’s August 2010 baseline projections were adjusted
to reflect the continuation of routine fixes to the Sustainable Growth Rate formula used to
set Medicare physician payment rates. This adjustment was based upon the nominal freeze
scenario reported in CBO’s April 2010 Sustainable Growth Rate menu (CBO 2010b).
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