Will Obamacare Premiums Cost More or Less? Or Both?

Good news from the Congressional Budget Office: Obamacare isn't going to cost as much as expected because of lower premiums. Or wait, consumers are about to start paying much more for their insurance because of the law—at least according to the CBO. What's the story? Can they both be true?

In fact, they are both accurate.

Yes, premiums are rising: Between 2016 and 2018, CBO expects that the benchmark premium—the average cost of a "silver" plan on insurance exchanges—will increase 8.5 percent per annum. There are two reasons for that: First, the government will stop backing insurance programs that have especially high costs, and second, it seems as if many of the new insurance programs created under the law didn't pay providers as much as employer-based insurance. CBO thinks that's unsustainable, and that those plans will have to jack up premiums to bring their provider payments up to par. (The full CBO report is here.)

But, premiums are rising more slowly than projected: Premiums always rise—the question is whether the rate can be controlled. Most people don't actually get their insurance through the Affordable Care Act, and premiums overall are also growing slower than expected. No one is totally sure why—Obamacare's champions say it's cost-cutting measures in the law, skeptics say it's just a result of the recession, and there are a few other theories as well—but the clear result is that costs aren't rising as fast, at least for now.

In addition, CBO says fewer people are going to sign up for Obamacare than previously expected, because fewer people are uninsured than previously believed, leading to a lower overall bill for subsidizing people's coverage. Here's what the projections look like:

Estimated Cost of Obamacare Insurance Provisions

Of course, all of these projections could become irrelevant. The Supreme Court's deliberations in King v. Burwell hang over all of this. The justices heard oral arguments last week in that case, which seeks to overturn federal exchanges based on a technical reading of the legislative text. If the Court rules in favor of the plaintiffs or otherwise reconfigures the law—like it did in 2012's NFIB v. Sebelius—then these points might become moot. The decision is expected in late June, and the oral argument suggested a closely divided Court.