Federal Subsidies for Health Insurance Coverage for People Under Age 65: 2019 to 2029

The federal government subsidizes health insurance for most Americans through a variety of programs and tax provisions. This report, which describes the Congressional Budget Office’s updated baseline projections, provides estimates for the 2019–2029 period of the number of noninstitutionalized civilians under age 65 with health insurance and the federal costs associated with each kind of subsidy.

• In an average month for each year during that period, between 240 million and 242 million such people are projected to have health insurance, mostly from employment-based plans. But the number of people without health insurance is projected to rise from 30 million in 2019 to 35 million in 2029.
• Net federal subsidies for insured people will total $737 billion in 2019, according to estimates by CBO and the staff of the Joint Committee on Taxation (JCT). That annual sum is projected to reach $1.3 trillion in 2029.
• In each year during the period, Medicaid and the Children’s Health Insurance Program account for between 40 percent and 45 percent of the federal subsidies, as do subsidies in the form of tax benefits for work-related insurance. Medicare accounts for about 10 percent, and subsidies for coverage obtained through the marketplaces established by the Affordable Care Act or through the Basic Health Program account for less than 10 percent.
• Since CBO’s most recent report comparable to this one was published in May 2018, the projection of the number of people with employment-based coverage has risen by 3 million, on average, for the 2019–2028 period spanned by both reports. The projection of the average number of uninsured people has fallen by 1 million over that period. Projected net federal subsidies for health insurance from 2019 to 2028 have risen by 2 percent.
• Compared with actual amounts of spending in 2018, CBO’s projections for that year made in September 2017 were generally close—with the largest error being an overestimate of $15 billion (or 5 percent) for Medicaid spending.

In preparing the current projections, CBO and JCT used a new version of CBO’s health insurance simulation model, HISIM2. It incorporates new sources of survey and administrative data, better accounts for employers’ and consumers’ selection among different types of insurance plans, and can more easily simulate the effects of new insurance products. CBO and JCT use HISIM2 to estimate the major sources of health insurance coverage and associated premiums. On the basis of those estimates, the agencies use other models (for related taxes, Medicaid, and Medicare, for example) to estimate the associated budgetary costs.