What is CBO’s estimate of the deficit for 2016? What was the budget deficit for 2015?
CBO’s latest estimate (reported in August 2016) is that, if no additional legislation is enacted that would affect taxes and spending in fiscal year 2016 (which ends on September 30), the deficit for the year will total $590 billion, equal to 3.2 percent of gross domestic product (GDP). The federal government ran a budget deficit of $438 billion in fiscal year 2015, equal to 2.5 percent of GDP.
Our Budget page provides quick links to our 10-year and long-term budget projections.
Where can I find CBO’s latest budget and economic projections?
CBO issues 10-year budget projections (usually three times a year), 10-year economic forecasts (usually twice a year), reports on spending and revenues in the current fiscal year (monthly), and long-term budget projections (once a year).
| 10-Year Budget Projections | 10-Year Economic Projections | Long-Term Budget Projections |
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Visit our Budget, Economy, Outlook for the Budget and Economy, and Taxes pages for more information.
Why does CBO prepare cost estimates for legislation? What information is included in cost estimates?
View our Frequently Asked Questions About CBO Cost Estimates to learn more about why CBO prepares cost estimates, what information is included in estimates, and related matters, such as the difference between mandatory and discretionary spending.
Our Cost Estimates page provides all of our estimates in chronological order, with the most recent estimates shown first. The estimates are searchable by the number, title, committee, and program area of bills. Each estimate includes a short description of the legislation, an estimate of the legislation’s budgetary impact, and a brief explanation of the basis for that estimate.
How does CBO account for new information in its estimates?
CBO typically updates its baseline budget projections at specific times each year to reflect legislative action, economic changes, and other developments. Generally, the budgetary impact of legislation being considered in the House or Senate is measured relative to the baseline produced in the spring.
During the course of a year, however, events sometimes occur that are different from those anticipated in developing the baseline projections. In such cases, CBO follows long-standing procedures governing when and how to take into account such developments, which sometimes include the enactment of legislation, actions by the courts, or decisions by executive branch agencies.
If new information indicates that an action or event that would affect CBO’s baseline has happened or definitely will happen (such as a Supreme Court decision, or an agency issuing a final rule or making an official announcement that clearly indicates an intended action by the Administration), CBO incorporates that information in its next regular baseline update. In addition, CBO immediately takes that information into account in assessing what will happen under current law when it analyzes the effects of legislation being considered by the Congress, even if the agency has not published new baseline projections.
How do I find CBO’s major reports?
Looking for current and previous installments of CBO’s Budget and Economic Outlook, Long-Term Budget Outlook, or Analysis of the President’s Budget?
CBO’s page on major recurring reports has links to those and other key reports going back to 2000.
How do I find reports with policy options?
CBO produces numerous reports with specific options and broad approaches for changing federal tax and spending policies.
CBO periodically issues a volume of policy options—often referred to as “Budget Options“—covering a broad range of issues as well as separate reports that include policy options in particular areas.
Find budget options from recent volumes as well as some options that appeared in separate reports on CBO’s digital budget options page. You can sort by major budget category (mandatory spending, discretionary spending, or revenues), budget function (such as national defense, transportation, or income security), and by topic (such as housing, Medicare, or business and finance).
A related page—Reports with Policy Options—organizes CBO’s analytic reports that include policy options by broad issue area.
In addition to the budget options volume and various analytic reports, another report—Choices for Deficit Reduction: An Update—frames the choices that policymakers need to make, summarizes policy alternatives, and provides criteria that might be used to evaluate policy changes. (This is a companion report to CBO’s 2013 budget options volume, but the information presented is still largely relevant.)
Note: The agency’s most recent estimate of the budgetary effects of an option might differ from previous estimates or future estimates for various reasons. One reason is that the effects of policy options are measured relative to CBO’s latest projections of budget outcomes under current law; when CBO’s “baseline” projections change, the options’ estimated budgetary effects can change as well. Another reason is that CBO regularly incorporates new analysis—by the agency or others—in order to improve its estimates. A third reason that estimates can change over time is that the details of largely similar options may differ in ways that give rise to differences in their budgetary effects.
What are CBO’s latest projections for Medicare, Medicaid, and other health care programs?
For CBO’s latest projections of spending for major health care programs, see Table 1-2 of An Update to the Budget and Economic Outlook: 2016 to 2026 (August 2016).
Our Health Care page provides quick links to CBO’s 10-year and long-term projections for those programs.
How many people under the age of 65 are projected to have health insurance?
According to estimates by CBO and the staff of the Joint Committee on Taxation, an average of about 244 million noninstitutionalized residents of the United States under age 65 will have health insurance in any given month in 2016. Almost two-thirds of them will obtain coverage through an employer, and about a quarter will be enrolled in Medicaid or the Children’s Health Insurance Program (CHIP). A smaller number will have nongroup coverage that they purchase either through or outside one of the health insurance marketplaces established under the ACA or coverage that is provided by Medicare or through various other sources. On average, about 27 million people under age 65—10 percent of that population—are projected to be uninsured in 2016.
From 2017 through 2026, the number of people with coverage is expected to grow from 246 million to 253 million; the number of people obtaining coverage through some sources will increase slightly, and for other sources that number will decrease slightly. The number of uninsured people is also expected to rise, from 26 million to 28 million, but the portion of the under-65 population without insurance is projected to remain at about 10 percent.
How much are the federal subsidies, taxes, and penalties associated with health insurance coverage for people under age 65?
CBO and the staff of the Joint Committee on Taxation currently estimate that in 2016 the federal subsidies, taxes, and penalties associated with health insurance coverage will result in a net subsidy from the federal government of $660 billion, or 3.6 percent of gross domestic product (GDP). That amount is projected to rise at an average annual rate of 5.4 percent, reaching $1.1 trillion (or 4.1 percent of GDP) in 2026. For the entire 2017–2026 period, the projected net subsidy is $8.9 trillion. Two types of costs account for most of that amount:
- Federal spending for Medicaid and CHIP benefits provided to people under age 65 (excluding those who reside in a nursing home or other institution) is projected to amount to $3.8 trillion—or 43 percent of the total net subsidy. That amount includes $1.0 trillion in subsidies for people whom the ACA made eligible for Medicaid.
- Federal subsidies associated with employment-based coverage for people under age 65, which stem almost entirely from the exclusion of most premiums for such coverage from income and payroll taxes, are projected to be $3.6 trillion—or 41 percent of the total net subsidy.
Other subsidy costs are much smaller:
- Medicare benefits (net of premium payments and other offsetting receipts) for noninstitutionalized beneficiaries under age 65 are projected to amount to $1.0 trillion—or 11 percent of the total net subsidy. Such spending is primarily for people who are disabled.
- Subsidies for coverage obtained in the nongroup market, including the health insurance marketplaces, and through the Basic Health Program are estimated to total $0.9 trillion—or 10 percent of the total net subsidy.
The costs of those subsidies are offset to a small extent – $0.4 trillion (or 5 percent) – by taxes and penalties collected from health insurance providers, uninsured people, and employers.
What are CBO’s latest estimates of the cost of the insurance coverage provisions of the ACA and how have those estimates changed?
The effects of the health insurance coverage provisions of the ACA are incorporated into estimates of overall health insurance coverage and are a subset of the estimates of the net federal subsidies associated with such coverage that are discussed above. To separate the effects of the ACA’s coverage provisions from those broader estimates, CBO and the staff of the Joint Committee on Taxation (JCT) compared their current projections with estimates of what would have occurred if the ACA had never been enacted. In 2016, those provisions are estimated to reduce the number of uninsured people by 22 million and to result in a net cost to the federal government of $110 billion. For the 2017–2026 period, the projected net cost of those provisions is $1.4 trillion. Those estimates were included in CBO’s March 2016 report Federal Subsidies for Health Insurance Coverage for People Under Age 65: 2016 to 2026 and address only the insurance coverage provisions of the ACA, which do not generate all of the law’s budgetary effects. Many other provisions—such as various tax provisions that increase revenues and reductions in Medicare payments to hospitals, to other providers of care, and to private insurance plans delivering Medicare’s benefits—are, on net, expected to reduce budget deficits.
For the 2016–2025 period, CBO and JCT’s projection of the net cost of the ACA’s insurance coverage provisions is now $136 billion higher than their March 2015 estimate (from the last detailed projections that the agencies published). The largest difference from the March 2015 projection stems from an increase in projected spending for Medicaid because more people whom the ACA made eligible for Medicaid are expected to enroll than were anticipated when that projection was made. Compared with the projection made by CBO and JCT in March 2010, just before the ACA was enacted, the current estimate of the net cost of the insurance coverage provisions over the 2016–2019 period (the final years of the 10-year budget window used in the original report) is lower by $157 billion, or 25 percent.
Visit our Affordable Care Act page for all of CBO’s work on that topic.
How many people, according to CBO’s estimates, will have insurance coverage through the health insurance marketplaces?
Under the ACA, individuals and families can purchase health insurance through the marketplaces operated by the federal government, state governments, or partnerships between the federal and state governments; those meeting certain criteria may receive federal subsidies for that coverage. About 13 million people selected plans through the marketplaces in 2016 by the close of the open-enrollment period; however, CBO and the staff of the Joint Committee on Taxation (JCT) in March 2016 estimated that, in any given month, an average of about 12 million people will be covered by insurance purchased through the marketplaces. The agencies estimate that 10 million of those people will receive subsidies to purchase their coverage.
CBO and JCT estimate that average enrollment in any given month during the year will be lower than the number of people who selected a plan by the end of the open-enrollment period and lower than the total number of people who will have coverage at some point during the year. Some people are covered for only part of the year, and enrollment varies over the course of a year because people who experience a qualifying life event (such as a change in income or family size or the loss of employment-based insurance) are allowed to purchase coverage later in the year and because some people stop paying the premiums or leave their marketplace-based coverage as they become eligible for insurance through other sources.
CBO and JCT expect average enrollment to continue to increase to 15 million people in 2017 and then to between 18 million and 19 million people each year from 2018 to 2026. Between 80 percent and 85 percent of those enrollees—or about 14 million to 16 million people—are expected to receive subsidies for purchasing that insurance each year after 2017.
What is CBO’s latest estimate of the budgetary effects of the ACA?
Although CBO’s baseline projections require estimates of the budgetary effects of the Affordable Care Act’s (ACA’s) insurance coverage provisions over the coming decade, CBO cannot readily provide a new estimate of all of the budgetary effects of the ACA. The reasons for that are explained in a June 2014 blog post, which highlights the following points:
- The incremental budgetary effects of many provisions of the ACA are embedded in CBO’s baseline projections for preexisting programs and tax revenues, and they cannot be separately identified using the agencies’ normal estimating procedures—which are generally based on data that reflect all of the provisions of current law, including the ACA.
- A retrospective analysis of the effects of a current law is very different from a cost estimate for proposed legislation, particularly because it requires formulation of a counterfactual benchmark representing what would have happened if the law had not been enacted—a challenging undertaking that is beyond the scope of CBO’s usual analyses.
- Therefore, CBO and the staff of the Joint Committee on Taxation (JCT) cannot readily provide a retrospective analysis of the ACA that is analogous to the cost estimate provided by the agencies in 2010. That problem is not unique to the ACA but is common to most legislation that affects preexisting federal programs.
Based on revisions to the estimated budgetary effects of aspects of the ACA that CBO and JCT have analyzed, the agencies have no reason to think that their assessment that the ACA, on net, reduces budget deficits was incorrect.
Visit our Affordable Care Act page for CBO’s work on this topic, and visit our Health Care page for all of CBO’s work related to health care.
What is CBO’s latest estimate of the budgetary effects of repealing the ACA?
Consistent with their statutory responsibilities, CBO and the staff of the Joint Committee on Taxation (JCT) can continue to estimate the effects of prospective legislative actions, such as proposals to modify provisions of the Affordable Care Act (ACA) or to repeal the law entirely. Because of the complexities involved in implementing a repeal of the ACA, the budgetary effects of repealing the act would not simply be the opposite of the budgetary effects of the ACA itself.
CBO’s most recent estimate of the budgetary impact of repealing the entire ACA was published in June 2015. In that report, CBO and JCT analyzed the main budgetary and economic effects of repealing that law and concluded that doing so would probably increase federal deficits over the next decade, whether or not the effects on the overall economy are taken into account. Those macroeconomic “feedback” effects would reduce deficits, but would not offset the increases in deficits stemming from the other consequences of repealing the ACA. Since then, CBO has revised some components of its estimates and legislation has been enacted that will also affect them.
CBO and JCT have also estimated that a related bill, H.R. 3762, the Restoring Americans’ Healthcare Freedom Reconciliation Act, would reduce deficits over 10 years (including the effects of macroeconomic feedback). However, that bill would not have repealed all of the ACA’s provisions; in particular, the ACA’s reductions in Medicare payments would not have been repealed.
In June, CBO and JCT estimated that repealing the entire ACA would have several major effects, relative to the projections under current law, as discussed below.
Estimated Effect on Deficits: Including the budgetary effects of macroeconomic feedback, repealing the ACA would increase federal budget deficits by $137 billion over the 2016–2025 period. That estimate takes into account the proposal’s impact on federal revenues and direct spending, incorporating the net effects of two components:
- Excluding the effects of macroeconomic feedback—as has been done for previous estimates related to the ACA (and most other CBO cost estimates)—CBO and JCT estimated that federal deficits would increase by $353 billion over the 2016–2025 period if the ACA was repealed.
- Repeal of the ACA would raise economic output, mainly by boosting the supply of labor; the resulting increase in GDP is projected to average about 0.7 percent over the 2021–2025 period. Alone, those effects would reduce federal deficits by $216 billion over the 2016–2025 period, CBO and JCT estimated, mostly because of increased federal revenues.
Uncertainty Surrounding the Estimates: For many reasons, the budgetary and economic effects of repealing the ACA could differ substantially, and in either direction, from the central estimates described above. The uncertainty is sufficiently great that repealing the ACA could reduce deficits over the 2016–2025 period—or could increase deficits by a substantially larger margin than the agencies have estimated. However, CBO and JCT’s best estimate was that repealing the ACA would increase federal budget deficits by $137 billion over that 10-year period.
Impact on the Economy and the Budget Beyond 2025: Repealing the ACA would cause federal budget deficits to increase by growing amounts after 2025, whether or not the budgetary effects of macroeconomic feedback are included. That would occur because the net savings attributable to a repeal of the law’s insurance coverage provisions would grow more slowly than would the estimated costs of repealing the ACA’s other provisions—in particular, those provisions that reduce updates to Medicare’s payments. The estimated effects on deficits of repealing the ACA are so large in the decade after 2025 as to make it unlikely that a repeal would reduce deficits during that period, even after considering the great uncertainties involved.
Effect on Insurance Coverage: Repealing the ACA also would affect the number of people with health insurance and their sources of coverage. In June 2015, CBO and JCT estimated that the number of nonelderly people who are uninsured would increase by about 19 million in 2016; by 22 million or 23 million in 2017, 2018, and 2019; and by about 24 million in all subsequent years through 2025, compared with the number who are projected to be uninsured under the ACA. In most of those years, the number of people with employment-based coverage would increase by about 8 million, and the number with coverage purchased individually or obtained through Medicaid would decrease by between 30 million and 32 million.
Visit our Affordable Care Act page for CBO’s work on this topic.
Does CBO do “dynamic scoring”?
The short answer: Yes, but only under specific circumstances.
In May 2015, the Congress adopted a concurrent resolution on the budget for fiscal year 2016. That resolution requires CBO, to the greatest extent practicable, to incorporate the budgetary impact of macroeconomic effects into its 10-year cost estimates for “major” legislation that Congressional authorizing committees approve. (Major legislation is defined as having either a gross budgetary effect, before incorporating macroeconomic effects, of 0.25 percent of GDP in any year over the next 10 years, or having been designated as such by either Chair of the Budget Committees.) Those macroeconomic effects might include, for example, changes in the labor supply or private investment. Such estimates must also include, when practicable, a qualitative assessment of the budgetary effects for the following 20 years. Incorporating such macroeconomic feedback into cost estimates for legislation is often called “dynamic scoring.” CBO has published a presentation and a blog post about how it will implement dynamic scoring in response to that new requirement.
Since the Congressional budget process was established in the 1970s, CBO’s cost estimates have typically not included dynamic analysis. Completing macroeconomic analysis of all proposed legislation would not be feasible—it would require complex modeling and a significant amount of time; most legislation analyzed by CBO would have negligible macroeconomic effects (and thus negligible feedback to the federal budget); and estimates of macroeconomic effects are highly uncertain. Among the few exceptions was our cost estimate in 2013 for immigration legislation that would have substantially increased the size of the U.S. labor force.
In analyses other than cost estimates, CBO has produced a number of estimates of how some proposals that would significantly change federal spending and tax policies would affect the overall economy, as well as how such effects would affect the federal budget. In June 2015, for example, CBO published an estimate of the budgetary effects of repealing the Affordable Care Act, which analyzed the main budgetary and economic effects of repealing that law. That report, in particular, serves as a good example of how CBO intends to present such dynamic estimates under the new requirement. Other recent reports incorporating such analyses include the agency’s annual examination of the economic impact of the President’s budget, its annual Long-Term Budget Outlook, and several reports on the macroeconomic effects of alternative budgetary paths.
You can see these reports and other work in this area on our Dynamic Analysis web page. (Also see CBO’s Economic Effects of Fiscal Policy page for additional analyses focused primarily on economic outcomes.)
How can I learn about CBO’s products, processes, and organization?
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Where can I find some definitions of key terms used in your reports? For example, what’s the difference between the deficit and the debt?
CBO’ s glossary defines various economic and budgetary terms as they are used in our reports. The document is updated periodically—most recently in 2012.