Today, CBO released updated projections of health insurance coverage for people under age 65 in the journal Health Affairs. In that paper, CBO’s analysts detailed the agency’s May 2023 baseline projections of health insurance, which were produced largely using CBO’s health insurance simulation model, or HISIM2. The model is updated annually to incorporate the most recent data, recently enacted legislation and other policy changes, and CBO’s demographic and economic forecasts. Estimates from HISIM2 are augmented by estimates from the staff of the Joint Committee on Taxation (JCT) and from CBO’s Medicaid and Medicare models. Also today, at a press briefing that Health Affairs organized, CBO’s analysts presented an overview of the updated projections, and the agency posted updated baseline tables on federal subsidies for health insurance.
The Share of People Under Age 65 Who Are Uninsured Is at a Historic Low
Enrollment in Medicaid and enrollment in marketplace plans have reached historic highs in 2023, mostly because of temporary policies (put in place during the pandemic) that kept beneficiaries enrolled in Medicaid and that enhanced the subsidies for health insurance purchased through marketplaces. The share of the population under age 65 that is uninsured is at an unprecedented low of 8.3 percent. Medicaid enrollment grew from 60.5 million in 2019 to 76.6 million in 2022. In 2023, Medicaid covers 28.1 percent of the under-65 population, and subsidized marketplace plans cover 5.2 percent. Employment-based insurance covers more than half (57.3 percent) of that population.
Low-income people have seen the largest gains in coverage and the largest drops in the share who lack insurance. For people with income below 150 percent of the federal poverty level, the share of people lacking insurance fell from 17 percent in 2019 to 10 percent in 2023.
In the latest updates to its microsimulation model, CBO has expanded its capacity for distributional analyses by race and ethnicity. Many factors drive variation in coverage by race and ethnicity, but employment, income, and immigration status are especially important. By CBO’s estimates, the share of the Hispanic population that is uninsured, at around 15 percent, is the highest among the shares for the groups examined.
The Share of People Lacking Insurance Is Projected to Increase
Over the next year and a half, CBO expects substantial declines in enrollment in Medicaid, as the continuous eligibility provisions put in place during the pandemic unwind. CBO projects that 6.2 million of the people leaving Medicaid will become uninsured. Additionally, if the enhanced subsidies expire after 2025, as scheduled, 4.9 million fewer people are estimated to enroll in marketplace coverage, instead enrolling in unsubsidized nongroup or employment-based coverage or becoming uninsured. By 2033, the share of people who are uninsured is projected to be 10.1 percent.
Projected Growth in Private Health Insurance Premiums Is Highest in the Near Term
Private health insurance premiums are an important component of the agency’s coverage projections. CBO estimates higher short-term growth rates for premiums (6.5 percent in 2023 and an average of 5.9 percent in 2024 and 2025), partly reflecting a bouncing back of medical spending from the suppressed levels of utilization early in the pandemic. Then, CBO projects lower growth rates (an average of 5.7 percent during 2026 and 2027 and of 4.6 percent over the 2028–2033 period).
Federal Subsidies for Health Insurance Reach $1 Trillion
Today, CBO also published updated baseline tables for federal subsidies for health insurance coverage for people under age 65. In CBO and JCT’s projections, net federal subsidies in 2023 for insured people under age 65 are $1.0 trillion. In 2033, that annual amount is projected to reach $1.6 trillion (or 4 percent of gross domestic product). Over the 2024–2033 period, subsidies are projected to total $12.5 trillion—with employment-based coverage accounting for 40 percent; Medicaid and the Children’s Health Insurance Program, 39 percent; Medicare, 13 percent; and subsidies for coverage obtained through the marketplaces or the Basic Health Program, 8 percent.
In early fall, CBO plans to publish a report that expands its analysis of health insurance. The report will include estimates of health insurance coverage and federal subsidies for people of all ages and people in territories, nursing facilities, and correctional facilities.
Carrie H. Colla is CBO’s Director of Health Analysis, and Sarah Masi is a Senior Adviser in the Budget Analysis Division.