2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

-50

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25

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75

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With

Macroeconomic

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Billions of Dollars, by Fiscal Year

Annual Effects on Deficits of Repealing the ACA

CONGRESS OF THE UNITED STATES

CONGRESSIONAL BUDGET OFFICE

CBO

Budgetary and 

Economic Effects of 

Repealing the 

Affordable Care Act

JUNE 2015
CBO

Notes

Unless otherwise indicated, all years are federal fiscal years, which run from October 1 to 

September 30 and are designated by the calendar year in which they end. 

Numbers in the text and tables may not add up to totals because of rounding.

As referred to in this report, the Affordable Care Act comprises the Patient Protection and 

Affordable Care Act (Public Law 111-148); the health care provisions of the Health Care and 

Education Reconciliation Act of 2010 (P.L. 111-152); and the effects of subsequent judicial 

decisions, administrative actions, and certain statutory changes. Some statutory changes that 

have been made subsequently have superseded provisions of the ACA and thus affect the 

estimated impact of repealing the ACA. 

Estimates of insurance coverage reflect average enrollment over the course of a calendar year 

and include spouses and dependents covered under family policies; people with multiple 

sources of coverage are assigned to a single category on the basis of their primary coverage. 

Additional data—specifically, those underlying the figures in this report—are posted along 

with the report on CBO’s website (www.cbo.gov/publication/50252). 

www.cbo.gov/publication/50252
Contents

CBO

Summary 1

What Would Be the Major Effects of Repealing the ACA? 1

How Would a Repeal Affect the Budget and the Economy Over the Next 10 Years? 2

How Would a Repeal Affect the Budget and the Economy Beyond 2025? 5

Why Are These Estimates Uncertain? 5

Estimating the Effects of Repeal Legislation 6

Factors Affecting Implementation 6

How CBO and JCT Developed the Estimates 6

Differences From an Estimate of the ACA’s Effects Since Its Enactment 7

Effects of a Repeal Over the Next 10 Years, Excluding Macroeconomic Feedback 7

Effects on Insurance Coverage 8

Effects on Direct Spending and Revenues Related to Insurance Coverage 8

Effects on Direct Spending for Medicare, Medicaid, and Other Programs 10

Effects on Discretionary Spending 12

Effects on Revenues Not Related to Coverage 12

Comparison With a Prior Estimate 12

The Macroeconomic Feedback Effects of a Repeal and Their Impact on the Federal Budget 15

Macroeconomic Effects from 2021 Through 2025 15

Macroeconomic Effects From 2016 Through 2020 17

Budgetary Feedback From Macroeconomic Effects 17

Other Potential Effects on Output 18

Impact on the Economy and the Federal Budget Beyond 2025 19

Effects Excluding Macroeconomic Feedback 19

Effects Including Macroeconomic Feedback 20

Uncertainty Surrounding the Estimates 20

The Supreme Court’s Ruling 20

Providers’ Responses to Changes in Payment Rates 21

Trends in Health Care Spending 21

Responses in Labor Markets 22

Overall Magnitude of the Uncertainty 22

List of Tables and Figures 23

About This Document 24

CBO

Budgetary and Economic Effects of 

Repealing the Affordable Care Act

Summary

Over the past several years, a number of proposals have 

been advanced for repealing the Affordable Care Act 

(ACA), which became law in March 2010. In this report, 

the Congressional Budget Office and the staff of the Joint 

Committee on Taxation (JCT) analyze the main budgetary and economic consequences that would arise from 

repealing that law. 

To conduct the analysis, CBO and JCT first considered 

the effects of the ACA’s repeal on health insurance coverage and on the federal budget over the next 10 years, 

holding gross domestic product (GDP) and other macroeconomic variables (such as interest rates) constant—

assumptions that underlie most cost estimates used in the 

Congressional budget process. The agencies then examined the macroeconomic effects of repealing the ACA and 

estimated the consequences of the resulting feedback for 

the federal budget over the next decade (involving changes 

in tax revenue, for example, that stem from changes in 

GDP). Finally, CBO and JCT considered the budgetary 

and economic effects of repealing the ACA for the period 

beyond 2025. 

As has been the practice for past analyses of the ACA, 

CBO and JCT estimated the budgetary implications of a 

repeal in two broad categories: the effects of repealing the 

act’s provisions concerning insurance coverage—including subsidies provided through the insurance exchanges, 

added costs for Medicaid, revenues from certain penalties 

and taxes, and related effects—and the effects of repealing 

other provisions of the act, which would mostly be 

related to Medicare spending and tax revenues. For the 

purposes of this analysis, CBO and JCT assumed that a 

repeal would take effect on January 1, 2016, and would 

not change federal law retroactively. As discussed below, 

all of the resulting estimates are subject to substantial 

uncertainty. 

What Would Be the Major Effects of 

Repealing the ACA? 

CBO and JCT estimate that repealing the ACA would 

have several major effects, relative to the projections 

under current law: 

 Including the budgetary effects of macroeconomic 

feedback, repealing the ACA would increase federal 

budget deficits by $137 billion over the 2016–2025 

period (see Table 1). That estimate takes into account 

the proposal’s impact on federal revenues and direct 

(or mandatory) 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 estimate 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 estimate, mostly because of increased 

federal revenues. 

 For many reasons, the budgetary and economic effects 

of repealing the ACA could differ substantially in 

either direction from the central estimates presented in 

this report. 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 is 

that repealing the ACA would increase federal budget 

deficits by $137 billion over that 10-year period. 
2 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT JUNE 2015

CBO

Table 1.

Summary of Estimated Effects on Direct Spending and Revenues of Repealing the 

Affordable Care Act

Billions of Dollars, by Fiscal Year

Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.

Notes: Repealing the Affordable Care Act (ACA) would reduce the amounts of future appropriations needed by the agencies responsible for 

implementing the ACA and would eliminate the authorizations of certain other appropriations; such effects on discretionary spending 

are not included in this table and would depend on future legislative action. In addition, the results shown here do not include effects 

on discretionary spending that stem from macroeconomic feedback, which are estimated to be minimal. 

Direct spending is the budget authority provided by laws other than appropriations acts and the outlays that result from that budget 

authority. 

* = between zero and -$0.5 billion.

a. Positive numbers indicate increases in the deficit, and negative numbers indicate reductions in the deficit. 

 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.

 Repealing the ACA also would affect the number of 

people with health insurance and their sources of 

coverage. CBO and JCT estimate 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. 

How Would a Repeal Affect the Budget and the 

Economy Over the Next 10 Years? 

CBO and JCT’s estimate that repealing the ACA would 

increase deficits by $353 billion over the 2016–2025 

period, excluding the budgetary impact of macroeconomic feedback, has four major components (see 

Table 2):

 An end to the ACA’s subsidies for health insurance 

coverage would generate gross savings for the 

government of $1,658 billion over the 2016–2025 

period, CBO and JCT estimate. Those savings would 

stem primarily from eliminating federal subsidies for 

insurance purchased through exchanges and from 

reducing outlays for Medicaid. 

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Total, 

2016-

2020

Total, 

2016-

2025

Effects on Outlays -71 -107 -106 -100 -93 -88 -77 -71 -65 -43 -477 -821

Effects on Revenues -66 -79 -99 -107 -115 -123 -132 -142 -152 -161 -466 -1,174

Effects on the Deficita -5 -28 -7 7 21 35 55 70 87 118 -12 353

Effects on Outlays * -2 -3 -2 -1 1 2 4 5 6 -8 9

Effects on Revenues 3 11 21 26 27 27 28 28 27 26 88 225

Effects on the Deficita -4 -13 -24 -29 -28 -26 -26 -24 -23 -20 -97 -216

Effects on Outlays -71 -109 -109 -103 -94 -87 -75 -68 -60 -37 -486 -812

Effects on Revenues -63 -67 -78 -81 -88 -96 -104 -114 -124 -135 -377 -949

Effects on the Deficita -8 -42 -31 -22 -6 9 29 46 64 98 -108 137

Estimated Changes Without Macroeconomic Feedback

Estimated Budgetary Impact of Macroeconomic Feedback

Estimated Changes With Macroeconomic Feedback
JUNE 2015 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT 3

CBO

Table 2.

Estimate of the Direct Spending and Revenue Effects of Repealing the Affordable Care Act, 

Without Macroeconomic Feedback

Billions of Dollars, by Fiscal Year

Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.

Notes: Positive numbers indicate increases in the deficit, and negative numbers indicate reductions in the deficit. 

CHIP = Children’s Health Insurance Program.

a. Includes spending for exchange grants to states and net spending and revenues for risk adjustment and reinsurance.

b. Includes the associated effects on revenues of changes in taxable compensation.

c. Consists mainly of the effects on revenues of changes in taxable compensation. CBO estimates that repealing the coverage provisions 

would reduce outlays for Social Security benefits by about $9 billion over the 2016–2025 period and would have negligible effects on 

outlays for other federal programs. 

d. These estimates reflect the effects of provisions affecting Medicare, Medicaid, and other federal health programs, and they include the 

effects of interactions between insurance coverage provisions and those programs.

e. Off-budget effects include changes in Social Security spending and revenues as well as in spending by the U.S. Postal Service.

 Those gross savings would be partially offset by the 

effects of eliminating several ACA provisions related to 

insurance coverage that are projected to reduce federal 

deficits—including the provisions that impose 

penalties on some employers and uninsured people 

and that impose an excise tax on certain highpremium insurance plans. In addition, increases in 

employment-based coverage stemming from a repeal 

would reduce revenues because most payments for that 

coverage are exempt from income and payroll taxes. In 

sum, those effects of repealing the ACA would increase 

federal deficits by $502 billion over the 2016–2025 

period, CBO and JCT estimate, and the net savings 

from repealing the ACA’s coverage provisions would 

thus be $1,156 billion. 

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Total, 

2016-

2020

Total, 

2016-

2025

Exchange Subsidiesa -41 -69 -78 -82 -83 -86 -91 -94 -98 -101 -353 -822

Medicaid and CHIP Outlays -44 -66 -71 -75 -82 -88 -93 -97 -102 -106 -339 -824

Small-Employer Tax Creditsb -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -5 -11 ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ____

Subtotal -86 -136 -150 -158 -166 -175 -184 -193 -201 -208 -697 -1,658

Penalty Payments by Uninsured People 4 4 4 4 4 4 5 5 5 5 19 43

Penalty Payments by Employersb 9 13 15 16 16 17 18 20 21 22 69 167

Excise Tax on High-Premium Insurance Plansb 0 0 3 6 7 9 11 14 17 21 16 87

Other Effects on Revenues and Outlaysc 7 15 19 20 21 22 23 25 26 27 81 204 ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ____

Subtotal 19 32 40 45 48 52 58 63 69 75 185 502

Net Decrease in the Deficit From

Repealing Coverage Provisions -67 -104 -110 -113 -118 -123 -127 -130 -132 -133 -512 -1,156

Increase in the Deficit From Changes in Outlaysd 24 35 46 61 77 91 111 125 140 168 243 879

Increase in the Deficit From Changes in Revenues 39 40 57 59 62 66 70 75 79 83 258 631

Net Effect on the Deficit -5 -28 -7 7 21 35 55 70 87 118 -12 353

On-budget -8 -34 -14 -1 13 26 45 59 75 104 -44 265

Off-budgete 3 6 7 7 8 9 10 11 12 14 32 88

Net Changes in the Deficit From Repealing Insurance Coverage Provisions

Net Increase in the Deficit From Repealing

Net Increase or Decrease (-) in the Deficit

Other Provisions Affecting Direct Spending and Revenues
4 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT JUNE 2015

CBO

Figure 1.

Estimated Effects on Deficits of Repealing the Affordable Care Act

Billions of Dollars, by Fiscal Year

Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.

Note: The term “macroeconomic feedback” refers to the estimated effects on the federal budget that would arise from changes in 

economic output or other macroeconomic variables—such as changes in the number of hours that people work and in their aggregate 

compensation, which would change revenues, or changes in interest rates, which would change interest payments. 

 The ACA also includes many other provisions related 

to health care that are estimated to reduce net federal 

outlays, primarily for Medicare. The provisions with 

the largest effects reduced payments to hospitals, to 

other providers of care, and to private insurance plans 

delivering Medicare’s benefits, relative to what they 

would have been under prior law. Repealing all of 

those provisions would increase direct spending in the 

next decade by $879 billion, CBO estimates. 

 The ACA also includes many provisions that are 

estimated to increase federal revenues (apart from the 

effect of the provisions related to insurance coverage). 

Those with the most significant budgetary effects 

increased the Hospital Insurance payroll tax rate for 

high-income taxpayers, added a surtax on those 

taxpayers’ net investment income, and imposed 

annual fees on health insurers. JCT estimates that 

repealing all of those provisions would reduce 

revenues by a $631 billion over the 2016–2025 

period.

CBO and JCT also analyzed the macroeconomic effects 

of repealing the ACA and then estimated the impact of 

their feedback to the federal budget. According to the 

agencies’ estimates, repealing the ACA would increase 

GDP by about 0.7 percent in the 2021–2025 period, 

mostly because provisions of the law that are expected to 

reduce the supply of labor would be repealed. Over the 

next few years, however, repealing the ACA would have 

smaller estimated effects on output—partly because 

responses to a repeal would be expected to occur gradually and partly because the effects would be muted while 

the economy is operating below its potential (maximum 

sustainable) output. Over the 2016–2025 period, that 

macroeconomic feedback would reduce federal deficits by 

$216 billion, CBO and JCT estimate, largely because of 

the additional revenues attributable to the increases in the 

supply of labor (which would in turn increase employment and taxable income). 

All told, CBO and JCT estimate that repealing the ACA 

would raise federal deficits by $137 billion over the 2016–

2025 period through its impact on direct spending and on 

revenues. A repeal would reduce deficits during the first half 

of the decade but would increase them by steadily rising 

amounts from 2021 through 2025. Including the effects of 

macroeconomic feedback, a repeal of the ACA would 

increase the federal budget deficit by $9 billion in 2021, 

rising to $98 billion in 2025 (see Figure 1). 

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

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75

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125

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With

Macroeconomic

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JUNE 2015 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT 5

CBO

That growth in projected increases in deficits from 

repealing the ACA reflects the agencies’ estimates that, 

toward the end of the 10-year budget window, the net 

savings from repealing the law’s coverage provisions 

would increase more slowly than the net costs of repealing the act’s other provisions. Although many factors 

would affect the rate of growth of the savings from repealing the coverage provisions, one reason they would grow 

slowly is that the annual updates to exchange subsidies 

are structured in a way that slows their growth, which 

limits the savings from eliminating them; another is that 

the revenue loss from repealing the excise tax on certain 

high-premium insurance plans would grow very rapidly 

as more plans were affected each year. However, the revenue losses and spending increases that would result from 

repealing the act’s other provisions would grow more rapidly than the net savings from repealing the coverage 

provisions. Most significantly, the costs of repealing the 

ACA’s reductions in updates to Medicare’s payment rates 

would compound over the next decade because those 

reductions lower the growth rate of Medicare’s costs. 

How Would a Repeal Affect the Budget and the 

Economy Beyond 2025? 

CBO and JCT expect that the trend projected for the latter part of the coming decade would probably continue 

after 2025, whether or not the effects of macroeconomic 

feedback are incorporated into the analysis. To generate 

rough estimates for the decade beyond 2025, CBO and 

JCT extrapolated the budgetary effects that a repeal of 

the ACA would have in the years before 2025. According 

to that analysis, and excluding the budgetary effects of 

macroeconomic feedback, a repeal would increase annual 

deficits over the 2026–2035 period by amounts that lie 

within a broad range around one percent of GDP. 

Although the macroeconomic feedback stemming from a 

repeal would continue to reduce deficits after 2025, the 

effects would shrink over time because the increase in 

government borrowing resulting from the larger budget 

deficits would reduce private investment and thus would 

partially offset the other positive effects that a repeal 

would have on economic growth. Consequently, taking 

that feedback into account would not substantially alter 

the increases estimated for federal deficits that would 

occur over that period. A repeal of the ACA would probably increase deficits in subsequent decades as well, 

whether or not the effects of macroeconomic feedback 

are included.

Why Are These Estimates Uncertain?

Estimates of the effects of repealing the ACA are subject 

to substantial uncertainty, which stems at least in part 

from the difficulty in projecting the effects of the ACA 

itself. Although initial data are available about some particular effects, the ways in which individuals, employers, 

states, insurers, doctors, hospitals, and other affected 

parties will respond to the changes made by the ACA—

and the ways in which those same people and organizations would respond to its repeal—are all difficult to predict, and the responses could deviate in either direction 

from CBO and JCT’s estimates. It also is a difficult 

task—and one subject to considerable uncertainty—to 

predict how repealing a law as complex as the ACA would 

be interpreted and implemented by executive branch 

agencies without some specific statutory guidance. 

The Supreme Court’s forthcoming ruling about subsidies 

provided through insurance exchanges constitutes 

another major source of uncertainty. CBO and JCT’s 

baseline projections and the estimates in this report 

reflect the way the law is currently being implemented, 

with subsidies available through all exchanges, but the 

Court could rule that the law does not authorize subsidies 

in some states. If that happened, CBO and JCT would 

reduce their projections of spending on those subsidies 

under current law and would reduce their estimates of the 

savings generated by repealing the ACA’s coverage provisions—although the magnitude of those reductions is 

uncertain and would depend in part on the specific 

details of the Court’s opinion. 

Over the longer term, there is particular uncertainty 

about the ways that providers of health care will respond 

to the ACA’s reductions in the updates to Medicare’s 

payment rates and about whether repealing the ACA 

would weaken pressures for cost control that may have 

contributed to a broad slowdown in spending growth for 

health care. The effects on labor markets, GDP, and other 

macroeconomic variables—and the resulting budgetary 

feedback—also could be smaller or larger than the 

agencies have estimated. 

On balance, CBO and JCT estimate that the most likely 

outcome of repealing the ACA would be to increase budget deficits over the 2016–2025 period, but that estimate 

is designed to represent the middle of a broad range of 

possible outcomes. In light of the myriad uncertainties 

involved, it is possible that repealing the ACA could 
6 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT JUNE 2015

CBO

reduce deficits over that period or could increase them by 

substantially more than the agencies have estimated. 

Estimating the Effects of 

Repeal Legislation

Implementing a repeal of the ACA would present major 

challenges. In the five years since its enactment, nearly 

every key provision of the law has taken effect and has 

been incorporated into final rules and other administrative actions. Undoing the ACA would thus be quite 

complicated. As a result, CBO and JCT’s budgetary and 

economic analyses have had to incorporate many assumptions about the ways in which legislation to repeal the 

ACA would be interpreted and implemented. For several 

reasons, the budgetary effects of a repeal would not simply 

be the opposite of the budgetary effects of the ACA itself.

Factors Affecting Implementation 

Although the proposals for repealing the ACA have varied 

slightly, they have shared many key elements. Generally, 

they have specified that the provisions of prior law would 

be “restored or revised as if such Act had not been 

enacted,” but they have not detailed how that would be 

accomplished.1

 As a result, executive branch agencies 

would have considerable discretion in determining how to 

implement a repeal. Some proposals have specified that the 

repeal would be effective as of the original enactment date 

of the ACA, indicating that the revisions would be applied 

retroactively.2

 Others have set effective dates in the future. 

For purposes of this analysis, CBO and JCT assumed that 

the repeal of the ACA would take effect on January 1, 

2016, and that it would not affect federal spending 

incurred or federal revenues collected in prior years. 

CBO and JCT cannot anticipate with any certainty what 

choices federal agencies would make to implement such 

legislation to repeal the ACA. Medicare, for example, 

would be affected in several fairly complicated ways. In 

many cases, the program’s payment rates reflect base payment amounts that are increased or updated each year 

according to formulas specified in law. The ACA reduced 

those updates, and repealing the relevant provisions 

would clearly cancel the reductions that are currently 

scheduled to take place in future years. The complication 

that arises is that the base payment amounts to which the 

updates will apply are currently lower than they would 

have been had the ACA never been enacted. If the ACA 

was repealed, it is unclear whether those base amounts 

would be adjusted upward so that future payments would 

not be affected by past update reductions. In other cases, 

repealing the ACA would require payment mechanisms 

for Medicare to revert to those used under prior law, but 

the Department of Health and Human Services (HHS) 

would need to decide how to calculate those payments 

once the law was repealed. (Legislation to repeal the ACA 

could reduce the scope of such discretion, however, by 

specifying the manner of restoration or revival of the 

provisions of prior law.) 

How CBO and JCT Developed the Estimates 

The analysis presented in this report is based on the 

spending and revenue projections contained in CBO’s 

March 2015 baseline, as adjusted for subsequently 

enacted legislation (in particular, Public Law 114-10, 

the Medicare Access and CHIP Reauthorization Act of 

2015).3

 The estimates thus reflect all of the previous 

administrative actions, judicial decisions, and enacted 

legislation modifying the ACA’s provisions or affecting 

its implementation that were incorporated into that 

baseline. 

In some cases, provisions of the ACA have been superseded by subsequent legislation, so repealing those provisions would not have a budgetary impact. For example, 

the ACA extended funding for the Children’s Health 

Insurance Program (CHIP) through 2015. However, 

P.L. 114-10 extended that funding through 2017, so 

repealing the ACA would not reverse the extension of 

CHIP that was enacted as part of the ACA. Similarly, 

P.L. 114-10 modified provisions governing the premiums 

that enrollees with higher income must pay for Part B of 

Medicare, superseding changes to those premiums made 

by the ACA. Several tax provisions that were enacted as 

1. For example, see H.R. 596, a bill to repeal the Patient Protection 

and Affordable Care Act and health care-related provisions in the 

Health Care and Education Reconciliation Act of 2010, and for 

other purposes, 114th Cong. (2015), www.congress.gov/bill/

114th-congress/house-bill/596.

2. For example, see H.R. 6079, Repeal of Obamacare Act, 112th 

Cong. (2012), www.congress.gov/bill/112th-congress/house-bill/

6079. For a discussion of the challenges involved in repealing the 

ACA retroactively, see Congressional Budget Office, letter to the 

Honorable John Boehner providing an estimate for H.R. 6079, 

the Repeal of Obamacare Act (July 24, 2012), www.cbo.gov/

publication/43471. 

3. See Congressional Budget Office, Updated Budget Projections: 

2015 to 2025 (March 2015), www.cbo.gov/publication/49973,

and cost estimate for H.R. 2, the Medicare Access and CHIP 

Reauthorization Act of 2015 (March 25, 2015), www.cbo.gov/

publication/50053. 
JUNE 2015 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT 7

CBO

part of the ACA also have been repealed or modified, 

thus reducing some of the revenue consequences of 

repealing the ACA.

Furthermore, CBO and JCT anticipate that some 

changes induced by the ACA would be sustained in the 

event of its repeal, at least for some period. For example, 

the ACA established deadlines that accelerated implementation of Medicare’s bidding program for durable 

medical equipment, and CBO expects that if the ACA 

was repealed, that program would not revert to the slower 

schedule anticipated under prior law. Similarly, some of 

the people projected to enroll in Medicaid as a result 

of the ACA were eligible for the program under prior law 

and thus would remain eligible in the event of a repeal; 

CBO and JCT estimate that rates of enrollment among 

those previously eligible people would remain elevated for 

a few years. Whether a repeal of the ACA would have 

broader effects on the rate of cost growth in health care—

beyond the effects already captured in CBO and JCT’s 

estimates—is discussed further below. 

Because the ACA was a large, complex piece of legislation, estimating the effects of its repeal also is complicated, although the degree of difficulty varies somewhat 

depending on the provision. For example, estimating the 

effects of repealing the ACA’s insurance coverage provisions is simplified by the fact that those provisions created 

many new flows of funds that CBO and JCT can distinguish and estimate separately from one another—in particular, the subsidies for insurance purchased through 

exchanges and federal payments for Medicaid beneficiaries made newly eligible by the law—in constructing 

baseline budget projections. In those cases, the effect of 

repeal can be readily estimated by reversing the signs 

of those amounts as projected in CBO’s baseline (with 

some adjustments, described elsewhere in this report). 

However, some of those provisions and many others in 

the ACA modified existing programs or existing tax law 

or affected other spending or revenues indirectly. Those 

budgetary effects are not projected separately in CBO’s 

baseline and must be newly estimated for each repeal proposal, relative to current baseline projections of spending 

and revenues. For example, Medicare’s total payments to 

hospitals change from year to year for various reasons, 

and there is no identifiable stream of payments or savings 

that is specifically attributable to the ACA’s provisions—

so those savings must be estimated anew. The ACA 

includes dozens of such provisions that affect payments to 

different types of providers. Likewise, various provisions 

of the ACA governing revenues affect the ways that 

households and businesses arrange their finances and 

thus alter income or payroll tax revenues. However, the 

effects of the ACA on those continuing revenue streams 

cannot be easily identified and are not projected separately, so they must be newly estimated in any analysis of 

repeal legislation. 

Differences From an Estimate of the 

ACA’s Effects Since Its Enactment

A related question that sometimes arises is whether CBO 

and JCT could provide an updated estimate of the ACA’s 

budgetary impact from its inception that would be similar to the analyses that the agencies provided when the 

law was enacted. A retrospective analysis of the effects of 

a current law is quite different from a cost estimate for 

proposed legislation because such an analysis requires the 

formulation of a counterfactual benchmark to represent 

what would have happened over the past few years if the 

law had not been enacted; that would be a challenging 

undertaking that is beyond the scope of CBO and JCT’s 

usual analytic methods. The agencies therefore cannot 

readily provide a retrospective analysis of the ACA that is 

analogous to the cost estimate that was provided in 2010. 

That problem is not unique to the ACA—it is common 

to most legislation that affects preexisting federal 

programs and taxes.4

Effects of a Repeal Over the 

Next 10 Years, Excluding 

Macroeconomic Feedback

To estimate the budgetary effects of the ACA’s repeal, 

CBO and JCT first examined the impact on health insurance coverage and on the federal budget over the next 

decade, holding GDP and other macroeconomic variables constant—which is the only approach that the 

agencies take for most cost estimates. As with past analyses of the ACA, the current budgetary analysis involved 

grouping the ACA’s provisions into two broad categories: 

The provisions concerning insurance coverage, including 

subsidies provided through the insurance exchanges, 

increased outlays for Medicaid, revenues from certain 

penalties and taxes, and related budgetary effects; and the 

various noncoverage provisions, mostly affecting direct 

4. For additional discussion, see Congressional Budget Office, 

answers to questions for the record following a hearing on the 

budget and economic outlook for 2014 to 2024 conducted by the 

Senate Committee on the Budget (June 10, 2014), pp. 14–19, 

www.cbo.gov/publication/45396. 
8 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT JUNE 2015

CBO

spending for Medicare and making changes in the tax 

code that are not directly related to insurance coverage. 

Taking into account the effects on federal revenues and 

direct spending but excluding the budgetary effects of 

macroeconomic feedback, CBO and JCT estimate that a 

repeal of the ACA would increase federal deficits by 

$353 billion over the 2016–2025 period.5

 That figure 

reflects an estimated reduction in outlays of $821 billion 

that is more than offset by an estimated reduction in revenues of $1,174 billion. The resulting estimate of the 

effects on deficits is substantially larger than the one 

CBO and JCT issued in July 2012 for a similar proposal 

to repeal the ACA—a difference that mostly reflects a 

shift in the budget window to encompass later years in 

which repealing the ACA would increase budget deficits 

sharply. As with past analyses of the ACA, the estimates 

in this report do not include any savings or costs associated with changes in discretionary spending—even 

though future appropriations to administer the ACA’s 

provisions would no longer be needed if that law was 

repealed.6

Effects on Insurance Coverage

A repeal of the ACA would include a repeal of various 

provisions that, under current law, are projected to 

increase the number of nonelderly people who have 

health insurance. Those provisions include an expansion 

of eligibility for Medicaid, subsidies for nongroup coverage purchased through health insurance exchanges, a 

requirement that most U.S. residents obtain insurance 

coverage or pay a penalty, and a penalty on certain 

employers that do not offer their full-time workers health 

insurance that meets specified standards for coverage 

and affordability. In addition, an excise tax on certain 

employment-based health plans with relatively high premiums will take effect starting in 2018. The ACA also 

contains a range of provisions that affect the types and 

prices of insurance policies that can be sold. Those—and 

many other provisions affecting insurance coverage—also 

would be repealed. 

If the ACA was repealed, many people would obtain their 

coverage from a source that differs from current projections, and many others who are projected to retain or 

gain insurance coverage in the future would instead be 

uninsured (see Table 3). On average, over the 2021–2025 

period, the following changes would occur, relative to 

CBO and JCT’s current-law projections: 

 About 14 million fewer people would be enrolled in 

Medicaid. 

 About 18 million fewer people would have nongroup 

coverage. That reduction is the net effect of a 

projected decline of about 22 million in nongroup 

coverage purchased through exchanges (which would 

no longer serve as a conduit for federal subsidies and 

might not exist at all) and a projected increase of 

about 4 million enrollees in nongroup coverage 

purchased directly from insurers. 

 About 8 million more people, on net, would have 

employment-based coverage—roughly mirroring the 

agencies’ estimate of the extent to which the ACA will 

reduce employment-based coverage in future years. 

 About 24 million more nonelderly U.S. residents 

would be uninsured.7

The effects on sources of insurance coverage in earlier 

years would generally be similar or slightly smaller, but 

the effects of repealing the ACA are estimated to be 

noticeably smaller in 2016—partly because the ACA is 

not projected to increase insurance coverage as much in 

that year. For reasons that are discussed below, the effects 

of repealing the ACA on people’s sources of insurance 

coverage differ slightly from the estimated effects of 

implementing the coverage provisions that are shown in 

the agencies’ most recent baseline projections. 

Effects on Direct Spending and Revenues 

Related to Insurance Coverage

CBO and JCT estimate that repealing the provisions of 

the ACA affecting health insurance coverage would yield 

a net decrease in federal deficits of $1,156 billion over 

5. Direct, or mandatory, spending is the budget authority provided by 

laws other than appropriation acts and the outlays that result from 

that budget authority. CBO and JCT estimate that on-budget 

deficits would increase by $265 billion over the 2016–2025 

period and that off-budget deficits would increase by $88 billion 

over that period. Off-budget effects include changes in Social 

Security spending and revenues as well as spending by the 

U.S. Postal Service. 

6. Discretionary spending is the budget authority provided and 

controlled by appropriation acts and the outlays that result from 

that budget authority.

7. As a result, the overall share of the nonelderly population with 

health insurance would drop from about 90 percent under current 

law to about 82 percent if the ACA was repealed. 
JUNE 2015 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT 9

CBO

Table 3.

Estimate of the Effects on Health Insurance Coverage of Repealing the Affordable Care Act 

Millions of Nonelderly People, by Calendar Year

Sources: Congressional Budget Office; staff of the Joint Committee on Taxation. 

Notes: Estimates of the nonelderly population include residents of the 50 states and the District of Columbia who are younger than 65.

ACA = Affordable Care Act; CHIP = Children’s Health Insurance Program.

a. Amounts reflect average annual enrollment over the course of a year and include spouses and dependents covered under family policies; 

people reporting multiple sources of coverage are assigned a primary source. Amounts represent CBO’s March 2015 baseline, adjusted for 

enactment of Public Law 114-10, the Medicare Access and CHIP Reauthorization Act of 2015.

b. “Other coverage” includes Medicare; the changes from repealing the ACA would be almost entirely for nongroup coverage. 

c. The change in employment-based coverage is the net result of projected increases and decreases in offers of health insurance from 

employers and changes in enrollment by workers and their families.

fiscal years 2016 through 2025 because of those provisions’ effects on direct spending and revenues (see Table 2 

on page 3). That amount includes the following:

 A total of $822 billion in savings resulting from 

eliminating exchange subsidies, 

 A net reduction of $824 billion in federal outlays for 

Medicaid and CHIP, and 

 Additional savings totaling $11 billion from the repeal 

of a tax credit for certain small employers that provide 

health insurance to their employees.8

Those gross savings of $1,658 billion over the 2016–

2025 period would be partly offset by costs totaling 

$502 billion stemming from four sources related to 

insurance coverage: 

 A reduction in revenues of $43 billion from 

eliminating penalty payments by uninsured people, 

 A decline in revenues of $167 billion from eliminating 

penalty payments by employers, 

 A reduction in revenues of $87 billion from 

eliminating the excise tax on certain high-premium 

insurance plans, and

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Insurance Coverage Under Current Lawa

Insurance exchanges 20 23 23 23 23 23 23 22 22 22

Medicaid and CHIP 51 52 52 52 53 53 54 54 54 55

Employment-based coverage 149 149 150 151 152 153 153 153 154 155

Nongroup and other coverageb 22 22 22 23 23 23 23 23 24 24

Uninsured 29 27 27 26 26 26 26 27 27 27 ___ ___ ___ ___ ___ ___ ___ ___ ___ ___

Total 271 272 274 275 276 277 278 280 281 282

Change in Insurance Coverage With Repeal of the ACA

Insurance exchanges -20 -23 -23 -23 -23 -23 -23 -22 -22 -22

Medicaid and CHIP -8 -11 -11 -12 -14 -14 -14 -14 -14 -14

Employment-based coveragec 6888888888

Nongroup and other coverageb 4444454544

Uninsured 19 22 22 23 24 24 24 24 24 24

Number of Uninsured Nonelderly People With Repeal of the ACA 48 49 49 49 50 50 50 50 50 50

8. The ACA’s premium subsidies for health insurance purchased 

through exchanges are structured as refundable tax credits; CBO 

and JCT treat the portions of such credits that exceed taxpayers’ 

other income tax liabilities as outlays and the portions that reduce 

tax payments as reductions in revenues—just as other refundable 

tax credits are treated. Subsidies to reduce enrollees’ cost-sharing 

liabilities are classified as outlays. A small portion of the cost of the 

tax credit for certain small employers (and the savings that would 

arise from its repeal) reflects its effects on outlays. 
10 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT JUNE 2015

CBO

 Other budgetary effects, mostly involving revenues, 

associated with shifts in the mix of taxable and 

nontaxable compensation resulting from net increases 

in employment-based health insurance coverage—

which would, on net, increase deficits by $204 billion.9

Those figures differ by about $51 billion from the estimated effects of the ACA’s coverage provisions that are 

reflected in CBO’s March 2015 baseline, for three main 

reasons.10 First, the costs for exchange subsidies and additional Medicaid payments over the first three months of 

fiscal year 2016 will be incurred during calendar year 

2015 and thus would not be eliminated by a repeal 

(which, for the purposes of this analysis, is assumed to 

take effect on January 1, 2016). Second, for the next 

few years, some proportion of the people who have 

enrolled or are expected to enroll in Medicaid as a result 

of the ACA—and who would have been eligible even if 

the ACA had never been enacted—probably would still 

enroll in Medicaid if the ACA was repealed, and the savings attributable to the repeal would be reduced as a 

result. Third, enactment of P.L. 114-10 increased the 

projections of enrollment in Medicaid and CHIP, relative 

to the March 2015 baseline, and correspondingly reduced 

the costs of coverage obtained through exchanges and 

employment-based plans. On net, those changes also 

reduced the savings that would be generated by repealing 

the ACA. (Those factors largely explain why the estimated effects that a repeal would have on the number of 

people with various types of insurance coverage differ 

slightly in magnitude from CBO and JCT’s baseline 

projections of the ACA’s effects.) 

Effects on Direct Spending for Medicare, 

Medicaid, and Other Programs

The ACA made numerous changes to payment rules and 

rates for Medicare and Medicaid, and it made other 

changes to certain other federal health programs as well. 

On net, CBO estimates, repealing those provisions would 

increase direct federal spending by $879 billion over the 

2016–2025 period, mostly because of changes in spending 

for Medicare, which would rise by an estimated 

$802 billion (see Table 4). Repealing the provisions of the 

ACA that are not related to insurance coverage would 

increase federal spending for Medicaid by about $66 billion over that period, mostly because of increases in 

payments for prescription drugs and payments to hospitals 

that treat a disproportionate share of uninsured or lowincome patients.11 On net, direct spending for other health 

programs would increase by about $10 billion, CBO estimates. 

Nearly all of the net increase estimated for direct spending for Medicare—about $715 billion of the estimated 

$802 billion—would stem from repealing provisions of 

the ACA that imposed reductions in payment rates or 

slowed increases in payment rates (relative to prior law) 

for services covered under Parts A and B of Medicare; 

those benefits are provided either through the traditional 

fee-for-service sector of the Medicare program or through 

private insurance plans.12 (Those private plans are generally known as Medicare Advantage plans; they receive 

payments under Medicare’s Part C.) Roughly one-half of 

that net increase in spending would stem from repealing 

provisions that changed payment rates in the fee-forservice sector; the other half would be attributable to 

repealing provisions that changed the rules for setting 

payment rates for Medicare Advantage plans.13 Because 

the ACA reduced the rate at which many payments are 

updated annually, the effects of those provisions on 

9. Changes in the extent of employment-based health insurance 

affect federal revenues because most payments for that coverage 

are exempt from income and payroll taxes. If employers increase 

or decrease the amount of nontaxable compensation they provide 

in the form of health insurance (relative to current-law 

projections), CBO and JCT estimate that offsetting changes will 

occur in wages and other forms of compensation—which 

generally are taxable—to hold total compensation roughly the 

same. Such effects also arise with respect to other provisions of law 

(such as the excise tax on certain high-premium insurance plans), 

and those effects are included in the estimates for those elements. 

10. See Congressional Budget Office, “Effects of the Affordable Care 

Act on Health Insurance Coverage—Baseline Projections” 

(March 2015), www.cbo.gov/publication/43900. 

11. In total, federal spending for Medicaid and CHIP would be 

reduced by $758 billion over the 2016–2025 period, combining 

the effects of repealing the provisions related to and those not 

related to insurance coverage. 

12. Medicare Part A covers inpatient services provided by hospitals, 

care in skilled nursing facilities, home health care, and hospice 

care. Part B mainly covers services provided by physicians, other 

practitioners, and hospitals’ outpatient departments.

13. Payments in the fee-for-service sector affect payments to Medicare 

Advantage plans, and changes in either of those types of payments 

affect the premiums that enrollees pay for Part B of Medicare. In 

previous estimates, CBO calculated the aggregate effects of those 

interactions separately, but now the agency incorporates those 

interactions into the estimates for each provision. As a result, the 

current estimates for the effects of repealing specific provisions of 

the ACA affecting Medicare are not comparable to previous 

estimates.
JUNE 2015 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT 11

CBO

Table 4.

Estimated Changes in Direct Spending and Revenues That Would Result From Repealing the 

Affordable Care Act, Without Macroeconomic Feedback

Billions of Dollars, by Fiscal Year

Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.

Note: CHIP = Children’s Health Insurance Program; * = between $0 and -$0.5 billion.

a. Represents the outlay portion of several coverage-related provisions, including small-employer tax credits, and associated effects of 

coverage provisions on outlays for Social Security benefits.

b. Off-budget effects include changes in Social Security spending and revenues as well as in spending by the U. S. Postal Service.

c. Amounts reflect repeal of fees on manufacturers and importers of branded drugs and on health insurance providers and repeal of an 

excise tax on manufacturers and importers of certain medical devices.

d. Positive numbers indicate increases in the deficit, and negative numbers indicate reductions in the deficit.

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Total, 

2016-

2020

Total, 

2016-

2025

Coverage Provisions

Exchange subsidies and state exchange grants -35 -59 -67 -71 -71 -74 -78 -82 -85 -89 -303 -712

Payments for risk adjustment and reinsurance -15 -17 -13 -15 -16 -16 -17 -17 -17 -16 -75 -158

Medicaid and CHIP -44 -66 -71 -75 -82 -88 -93 -97 -102 -106 -339 -824

Other changes in direct spendinga * * * -1 -1 -1 -1 -1 -1 -1 -2 -6 __ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ____

Subtotal -94 -142 -152 -161 -170 -179 -189 -197 -205 -211 -720 -1,700

Other Provisions

Medicare provisions 23 34 44 58 69 82 100 113 126 153 228 802

Other Medicaid provisions 2 2 3 4 7 8 9 10 11 11 17 66

Other changes in direct spending -1 -1 -1 -1 1 2 2 3 3 4 -3 10 __ __ __ __ __ __ ___ ___ ___ ___ ___ ___

Subtotal 24 35 46 61 77 91 111 125 140 168 243 879

Total Outlays -71 -107 -106 -100 -93 -88 -77 -71 -65 -43 -477 -821

On-budget -70 -106 -105 -100 -92 -87 -76 -70 -64 -42 -474 -813

Off-budgetb * -1 -1 -1 -1 -1 -1 -1 -1 -1 -4 -9

Coverage Provisions

Exchange premium credits 6 10 11 11 11 12 12 12 12 13 48 109

Collections for risk adjustment and reinsurance -14 -16 -13 -15 -16 -16 -17 -17 -17 -16 -74 -157

Small-employer tax credits 1 1 1 1 1 1 1 1 1 1 4 10

Penalty payments by uninsured people -4 -4 -4 -4 -4 -4 -5 -5 -5 -5 -19 -43

Penalty payments by employers -9 -13 -15 -16 -16 -17 -18 -20 -21 -22 -69 -167

Excise tax on high-premium insurance plans 0 0 -3 -6 -7 -9 -11 -14 -17 -21 -16 -87

Other changes in revenues -7 -16 -19 -20 -21 -22 -24 -25 -27 -28 -83 -209 __ __ __ __ __ __ __ __ __ __ ___ ___

Subtotal -27 -38 -42 -48 -52 -56 -62 -67 -73 -78 -208 -544

Other Provisions

High-income surtaxes -22 -17 -31 -33 -35 -37 -39 -42 -44 -47 -136 -346

Fees on certain manufacturers and insurersc -14 -18 -19 -18 -19 -20 -21 -22 -23 -23 -87 -196

Other revenue provisions -3 -6 -8 -8 -9 -10 -10 -11 -12 -13 -34 -89 __ __ __ __ __ __ __ __ __ __ ___ ___

Subtotal -39 -40 -57 -59 -62 -66 -70 -75 -79 -83 -258 -631

Total Revenues -66 -79 -99 -107 -115 -123 -132 -142 -152 -161 -466 -1,174

On-budget -62 -72 -91 -99 -106 -113 -121 -130 -138 -146 -430 -1,078

Off-budgetb -4 -7 -8 -8 -9 -10 -11 -12 -13 -15 -36 -96

Net Effect on the Deficit -5 -28 -7 7 21 35 55 70 87 118 -12 353

On-budget -8 -34 -14 -1 13 26 45 59 75 104 -44 265

Off-budgetb 3 6 7 7 8 9 10 11 12 14 32 88

Changes in Outlays

Changes in Revenues

Net Increase or Decrease (-) in the Deficitd
12 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT JUNE 2015

CBO

federal spending will compound over the next decade; as 

a consequence, the costs of repealing them would grow 

relatively rapidly. 

The ways in which HHS would implement a repeal of 

the ACA’s Medicare provisions governing payment 

updates are uncertain, however. For this analysis, CBO 

assumed that repealing the provisions that reduced payment updates in the fee-for-service sector would increase 

the payment updates in 2016 and beyond—but it also 

assumed that HHS would not adjust the current base 

payment amounts to remove the effects of past update 

reductions implemented under the ACA. If instead HHS 

also adjusted those base payment amounts upward for the 

purposes of determining future payments, the cost of 

repealing the ACA’s provisions would be roughly 

$160 billion higher over the 2016–2025 period than 

is estimated above. 

Effects on Discretionary Spending

The estimates discussed elsewhere in this report do not 

include any savings or costs associated with changes in discretionary spending. CBO’s original cost estimate for the 

ACA, issued in March 2010, focused on direct spending 

and revenues because those effects are relevant for budgetary procedures affecting Congressional debate and occur 

without any additional legislative action (as contrasted 

with discretionary spending, which is subject to future 

appropriation action). However, that estimate noted that 

additional funding would be necessary for agencies to carry 

out the responsibilities required of them by the legislation 

and that the legislation also included explicit authorizations for a variety of grants and other programs.14

Repealing the ACA would reduce the amounts of future 

appropriations that are needed for implementation or 

that are specifically authorized in the act for other purposes. (Some funds would be needed in 2016 to implement a repeal.)15 However, the impact of a repeal on total 

discretionary appropriations over the next several years 

would depend on future legislative actions. Moreover, the 

potential impact of such legislation on future appropriations is affected by the caps on annual appropriations that 

were established by the Budget Control Act of 2011. 

Eliminating the need to implement the ACA might lead 

to reductions in total discretionary spending, on net, or it 

might create some room under those caps for additional 

spending for other discretionary programs. 

Effects on Revenues Not Related to Coverage

The ACA made many changes to the Internal Revenue 

Code that were not directly related to the law’s insurance 

coverage provisions. JCT estimates that repeal of those 

noncoverage revenue provisions would reduce revenues 

by a total of $631 billion over the 2016–2025 period (see 

Table 4). The largest components of those revenue effects 

include the following:

 The ACA increased the Hospital Insurance payroll 

tax for certain high-income taxpayers and applied a 

surtax to their net investment income. Repeal of those 

provisions is projected to reduce revenues by 

$346 billion. 

 Repeal of an annual fee on health insurance providers is 

estimated to reduce revenues, on net, by $142 billion 

(reflecting both the loss of fee collections and the 

indirect effects of those fees on health insurance 

premiums that are either tax-preferred or subsidized). 

 The repeal of an annual fee on manufacturers and 

importers of branded drugs is projected to reduce 

revenues by $30 billion, and the repeal of an excise tax 

on manufacturers and importers of certain medical 

devices is projected to reduce revenues by $24 billion. 

Comparison With a Prior Estimate

CBO and JCT’s current estimate that repealing the ACA 

would increase deficits by $353 billion over 10 years 

(excluding the effects of macroeconomic feedback) differs 

from the estimate that the agencies released in July 2012 

for H.R. 6079—the last time they analyzed a proposal to 14. For more information, see Congressional Budget Office, cost 

estimate for H.R. 4872, the Reconciliation Act of 2010 (final 

health care legislation) (March 20, 2010), pp. 10–11, 

www.cbo.gov/publication/21351, letter to the Honorable Jerry 

Lewis about potential effects of H.R. 3590, the Patient Protection 

and Affordable Care Act, on discretionary spending (May 11, 

2010), www.cbo.gov/publication/21457, and “H.R. 3590, Patient 

Protection and Affordable Care Act, Additional Information on 

the Potential Discretionary Costs of Implementing PPACA” 

(May 12, 2010), www.cbo.gov/publication/21460. 

15. In 2012, CBO estimated that, over the 2013–2022 period, 

repealing the ACA would reduce the need for appropriations 

to the Internal Revenue Service by between $5 billion and 

$10 billion and would reduce the need for appropriations to 

HHS by between $5 billion and $10 billion. CBO has not 

updated those estimates. 
JUNE 2015 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT 13

CBO

Figure 2.

Comparison of Estimated Effects on Deficits of Repealing the Affordable Care Act

Billions of Dollars, by Fiscal Year

Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.

Notes: The term “macroeconomic feedback” refers to the estimated effects on the federal budget that would arise from changes in 

economic output or other macroeconomic variables—such as changes in the number of hours that people work and in their aggregate 

compensation, which would change revenues, or changes in interest rates, which would change interest payments. 

June 2015 estimates were developed for this report; 2012 estimates are from Congressional Budget Office, letter to the Honorable 

John Boehner providing an estimate for H.R. 6079, the Repeal of Obamacare Act (July 24, 2012), www.cbo.gov/publication/43471.

repeal all of the ACA’s provisions.16 At that time, CBO 

and JCT estimated that changes in direct spending and 

revenues would increase deficits by $109 billion over the 

period from 2013 through 2022. 

Most of the difference between that earlier estimate and 

the current one stems from a shift in the budget window 

to encompass later years—in which repealing the ACA is 

estimated to increase budget deficits sharply. In fact, over 

the 2016–2022 period, which is encompassed by both 

estimates, the estimated budgetary effects of repeal are 

quite similar (see Figure 2): In 2012, CBO and JCT estimated that repealing the ACA would increase budget deficits by a total of $46 billion from 2016 through 2022; 

the agencies now estimate that repeal would boost deficits 

by $78 billion over that period (excluding the effects of 

macroeconomic feedback). In 2012, CBO and JCT estimated that repealing the ACA would increase the deficit 

substantially in the decade after 2022, but they did 

not quantify the annual effects. CBO and JCT now estimate that repealing the ACA would increase deficits by 

$275 billion over the 2023–2025 period. 

It is difficult to identify all of the specific reasons for the 

differences between the two estimates for the 2016–2022 

period because CBO and JCT have made many changes 

in their baseline projections since 2012 to account for 

such factors as changes in economic conditions and projections, technical changes and improvements in the 

agencies’ models, administrative actions, judicial decisions, and statutory changes. One item of significance is 

that, since 2012, the agencies have substantially lowered 

their projections of per capita spending on health care. 

That change in particular has contributed importantly to 

substantial but offsetting changes in the estimated effects 

of repealing various components of the ACA: 

 Holding other factors equal, the changes in 

projections of per capita spending on health care have 

lowered the total cost for any given year of subsidizing 

coverage through the exchanges or Medicaid; 

correspondingly, the gross and net savings estimated to

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

-50

-25

0

25

50

75

100

125

150

June 2015, Without

Macroeconomic

Feedback

July 2012

16. The 2012 estimate was issued shortly after the Supreme Court 

ruling that made the ACA’s Medicaid expansion optional for 

states. See Congressional Budget Office, letter to the Honorable 

John Boehner providing an estimate for H.R. 6079, the Repeal of 

Obamacare Act (July 24, 2012), www.cbo.gov/publication/

43471. 
14 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT JUNE 2015

CBO

Figure 3.

Evolution of CBO and JCT’s Estimates of the Net Budgetary Effects of the 

Insurance Coverage Provisions of the Affordable Care Act

Billions of Dollars, by Fiscal Year

Sources: Congressional Budget Office; staff of the Joint Committee on Taxation.

Notes: Effects on the deficit of provisions of the Affordable Care Act that are not related to insurance coverage and effects on discretionary 

spending are not shown. 

Estimates for the various years are from Congressional Budget Office, “Effects of the Affordable Care Act on Health Insurance 

Coverage—Baseline Projections” (March 2015), “Insurance Coverage Provisions of the Affordable Care Act—CBO’s April 2014 

Baseline” (April 2014), “May 2013 Baseline” (May 2013) www.cbo.gov/publication/43900, and cost estimate for H.R. 4872, the 

Reconciliation Act of 2010 (final health care legislation) (March 20, 2010), www.cbo.gov/publication/21351.

result from repealing the ACA’s insurance coverage 

provisions are smaller. Many other factors also have 

affected the agencies’ projections since 2012, including reductions in the number of people projected to 

purchase coverage through exchanges and increases 

in the number of people projected to obtain coverage 

through Medicaid—but the net effect has been a 

reduction in the projected costs of the coverage 

provisions (see Figure 3). Taking into account all 

of those factors, the net savings from repealing the 

coverage provisions are now projected to total 

$762 billion over the 2016–2022 period, as compared 

with $1,027 billion in the previous estimate (a 

26 percent reduction). 

 At the same time, lower projections of spending on 

health care are reflected in lower projections of outlays 

for Medicare, Medicaid, and other federal health care 

programs—and thus in lower estimated costs in any 

given year from repealing the ACA provisions that 

reduced those outlays. Taking into account those and 

other factors, and again focusing on the 2016–2022 

period covered by both estimates, the net costs of 

repealing those provisions are now projected to total 

$445 billion, as compared with $623 billion in the 

previous estimate (a 28 percent reduction).

 The increase in deficits that stems from repealing the 

noncoverage revenue provisions is now projected to 

total $394 billion over the 2016–2022 period, as 

compared with $450 billion in the previous estimate 

(a 12 percent reduction). Changes to the overall 

macroeconomic forecast, additional data, and changes 

to the tax code that have occurred since 2012 have 

resulted in revisions to estimates of the effects of 

repealing several of those revenue provisions. The 

projections of an overall reduction in health spending 

also have affected the estimates for several of those 

provisions, thus contributing to a smaller estimate for 

costs that would be attributable to a repeal.

In sum, CBO and JCT now estimate that repealing the 

insurance coverage provisions of the ACA would generate 

$762 billion in net savings over the 2016–2022 period, 

an amount that would be offset by $840 billion in estimated costs from repealing the other provisions, to yield a 

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

0

25

50

75

100

125

150

175

March 2015

Baseline

March 2010 Cost

Estimate

April 2014

Baseline

May 2013

Baseline
JUNE 2015 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT 15

CBO

net increase in deficits of $78 billion over that period. In 

2012, the estimate of $1,027 billion in net savings from 

repealing the ACA’s coverage provisions was offset by 

$1,073 billion in estimated costs from repealing the other 

provisions—yielding an estimated net increase in deficits 

of $46 billion for the 2016–2022 period. 

The Macroeconomic Feedback Effects 

of a Repeal and Their Impact on the 

Federal Budget

CBO and JCT also have analyzed the effects that repealing the ACA would have on the U.S. economy and estimated the budgetary impact—or feedback effects—of 

those macroeconomic changes. CBO and JCT estimate 

that the net effect on the economy’s output would be 

negligible in 2016 but would grow after that. According 

to the agencies’ estimates, from 2021 through 2025, a 

repeal would increase GDP by about 0.7 percent, on 

average—mostly by repealing provisions that, under 

current law, are expected to reduce the supply of labor. 

The macroeconomic feedback effects of repealing the 

ACA would lower federal deficits by $216 billion over the 

2016–2025 period, CBO and JCT estimate (see Table 1 

on page 2). The largest effect would be an increase in revenues arising from the increased supply of labor, which in 

turn would boost employment and taxable income. After 

accounting for the feedback effects, CBO and JCT estimate that the total impact on direct spending and revenues of repealing the ACA would be to increase federal 

deficits by $137 billion over the 2016–2025 period. 

The estimates of the macroeconomic effects and of their 

consequences for the federal budget are highly uncertain, 

however, and actual results could be substantially different. 

In general, CBO and JCT analyze the macroeconomic 

effects of changes in fiscal policy by examining similar 

policies that have been implemented previously and by 

using results from a variety of economic models. Both 

agencies also distinguish between longer- and shorterterm effects. Changes in fiscal policy affect output over 

the longer term by altering people’s incentives to work 

and save and by changing businesses’ incentives to invest, 

thereby changing potential output over the longer term. 

In the shorter term, changes in fiscal policies also can 

affect the economy by influencing the demand for goods 

and services, leading to changes in actual output relative 

to potential output (the maximum sustainable output of 

the economy). 

For this report, CBO and JCT collaborated to examine 

the macroeconomic effects of repealing the ACA and 

those effects’ feedback to the federal budget, with each 

agency focusing on different components of the analysis. 

JCT primarily analyzed the macroeconomic effects and 

feedback to federal revenues stemming from the revenue 

provisions not related to insurance coverage and from the 

excise tax on certain high-premium insurance plans.17

CBO primarily analyzed the macroeconomic effects and 

feedback to federal revenues arising from the other 

changes in fiscal policy that would stem from repealing 

the ACA, as well as the feedback effects to federal outlays 

stemming from a repeal.18 The estimates of macroeconomic effects and of their feedback to the federal 

budget presented in this report constitute a synthesis of 

those analyses.

Macroeconomic Effects from 2021 Through 2025

The largest macroeconomic effects of repealing the ACA 

would take several years to arise. CBO and JCT estimate 

that, over the final five years of the current budget window—the period from 2021 to 2025—repealing the 

ACA would boost GDP by about 0.7 percent, on average, 

relative to current-law projections. During that period, 

the estimated effects on output stem from two main 

sources: 

17. JCT used its macroeconomic equilibrium growth (MEG) model, 

in which economic output in the longer run is determined by the 

supply of labor and capital, which in turn respond to the rates of 

taxation on wages and capital income. In the shorter run, output 

may be influenced by changes in consumer demand stemming 

from changes in after-tax income. For a description, see Joint 

Committee on Taxation, Overview of the Work of the Staff of the 

Joint Committee on Taxation to Model the Macroeconomic Effects of 

Proposed Tax Legislation to Comply with House Rule XIII.3.(h)(2), 

JCX-105-03 (December 2003), http://go.usa.gov/3XS2R. For a 

discussion of the values currently used in the MEG model, see 

Joint Committee on Taxation, Macroeconomic Analysis of the 

“Tax Reform Act of 2014,” JCX-22-14 (February 2014), 

http://go.usa.gov/3XSTJ. 

18. To estimate the effects of repealing the ACA over the longer term, 

CBO employed a version of a widely used Solow-type growth 

model in which economic output is determined by the number of 

hours of labor that workers supply, the size and composition of 

the capital stock (such as factories and equipment), and the 

combined productivity of labor and capital (known as total factor 

productivity). In the short term, changes in fiscal policies also can 

affect the economy by influencing the demand for goods and 

services by consumers, businesses, and governments, which leads 

to changes in actual output relative to potential output. For a 

description see Congressional Budget Office, How CBO Analyzes 

the Effects of Changes in Federal Fiscal Policies on the Economy

(November 2014), www.cbo.gov/publication/49494. 
16 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT JUNE 2015

CBO

 The ACA’s largest effects on output are projected to 

result from several provisions that reduce the supply of 

labor by decreasing some people’s incentives to work; 

repealing those provisions would thus increase the 

supply of labor and increase output relative to baseline 

projections. 

 Implementation of the ACA is also expected to shrink 

the capital stock, on net, over the next decade, so a 

repeal would increase the capital stock and output over 

that period. In particular, repealing the ACA would 

increase incentives for capital investment, both by 

increasing labor supply (which makes capital more 

productive) and by reducing tax rates on capital 

income. However, the net increase in deficits that 

would be caused by a repeal—even after accounting for 

macroeconomic feedback—would increase government 

borrowing and thus would reduce capital investment 

somewhat in the longer term. 

Labor Supply. CBO and JCT estimate that repealing the 

ACA would increase the supply of labor and thus increase 

aggregate compensation (wages, salaries, and fringe benefits) by an amount between 0.8 percent and 0.9 percent 

over the 2021–2025 period. Those effects would be the 

result of repealing various provisions of the ACA that are 

estimated to reduce the amount of labor that people 

choose to supply. In particular, the subsidies and tax 

credits for health insurance that the ACA provides to 

some people are phased out as their income rises—creating an implicit tax on additional earnings—and those 

subsidies, along with expanded eligibility for Medicaid, 

generally make it easier for some people to work less or to 

stop working without losing health insurance coverage.19

For other people, the act directly imposes higher taxes on 

labor income, thus discouraging work. Repealing the 

ACA would reverse those effects. In percentage terms, the 

increase in total hours worked is estimated to be larger 

than the increase in aggregate compensation because the 

largest increases in labor supply would occur among 

the lower-wage workers whose incentives would be most 

strongly affected. Specifically, repealing the ACA would 

increase the aggregate number of hours worked by about 

1.5 percent over the 2021–2025 period, CBO and JCT 

estimate. 

CBO previously estimated that implementation of the 

ACA will have larger effects on hours worked and compensation.20 To update that analysis for this estimate, 

CBO and JCT first considered the agencies’ most recent 

baseline projections of the number of people affected by 

the ACA’s provisions—including projections of enrollment in subsidized exchange plans and in Medicaid. The 

agencies also considered more recent evidence about 

the ACA’s likely effects on labor markets and extended 

that analysis to 2025. As a result, the estimated effects of 

the ACA on total hours worked and compensation in the 

second half of the 10-year budget window were reduced 

by about 15 percent, mostly because fewer people are 

now projected to receive subsidies through exchanges 

under current law. 

Capital Stock. CBO and JCT estimate that repealing the 

ACA would increase the capital stock over the 2021–

2025 period, on net, for two main reasons. First, the projected reduction in labor supply stemming from the ACA 

is expected to cause a gradual reduction in the capital 

stock as businesses adjust the amount of capital available 

for workers to use—so repealing the ACA would undo 

that effect. Second, repealing the ACA also would eliminate several taxes that reduce people’s incentives to save 

and invest—most notably the 3.8 percent tax on various 

forms of investment income for higher-income individuals and families. The resulting increase in the incentive to 

save and invest—relative to current law—thus would 

gradually boost the capital stock; consequently, output 

would be higher. 

CBO and JCT also considered the extent to which 

repealing the ACA would affect output through its effects 

on federal deficits. As discussed in more detail below, the 

agencies estimate that repealing the act ultimately would 

increase federal deficits—even after accounting for other 

macroeconomic feedback. Larger deficits would leave less 

money for private investment (a process sometimes called 

crowding out), which reduces output. Over the 2021–

2025 period, however, that effect would not be large 

enough to offset the effects of repealing the ACA that 

would boost investment. 

19. Because such people would still be insured, CBO and JCT 

estimate that the changes in labor supply stemming from repeal of 

the ACA would not significantly affect the number of people who 

had health insurance, although the changes would affect the 

sources of health insurance for some people. 

20. CBO had estimated that the ACA will cause a reduction of 

roughly 1 percent in aggregate labor compensation over the 2017–

2024 period and will reduce the total number of hours worked, on 

net, by 1.5 percent to 2.0 percent during that period. See 

Congressional Budget Office, The Budget and Economic Outlook: 

2014 to 2024 (February 2014), Appendix C, www.cbo.gov/

publication/45010. 
JUNE 2015 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT 17

CBO

CBO and JCT thus estimate that, on balance, repealing 

the ACA would yield a larger capital stock, which would 

boost output over that period. The effects on output of 

those changes in the capital stock would be smaller than 

the increases in output stemming from changes in the 

supply of labor. 

Macroeconomic Effects From 2016 Through 2020 

CBO and JCT estimate that repealing the ACA would 

have smaller effects on output in the next few years than 

would occur later in the coming decade, in part because 

the ACA’s adverse effects on output are projected to be 

smaller as the responses to its provisions phase in. Correspondingly, repealing the law would have smaller effects 

over the 2016–2020 period. The macroeconomic effects 

of implementing or repealing the ACA also are different 

when the economy operates below its potential, as is 

projected for the next two years or so. CBO and JCT 

estimate that a repeal would have a negligible effect on 

output in 2016 and would increase output by about 

0.1 percent in 2017, rising to about 0.6 percent in 2020. 

Labor Supply. One reason that the effects of repealing the 

ACA would be smaller over the next few years is that 

the law’s influence on labor supply will probably be 

smaller over that period. That conclusion reflects an 

expectation that the number of people who will receive 

exchange subsidies under the ACA will be somewhat 

smaller next year than in later years. The number of additional Medicaid enrollees also is projected to rise over the 

next several years under current law. Moreover, people 

will probably adjust gradually to the incentives under 

current law, and CBO and JCT estimate that affected 

people would probably adjust gradually to a repeal of the 

ACA as well. Consequently, the estimated effects on labor 

supply over the shorter term—both for current law and 

for a repeal of the ACA—are smaller. 

A second consideration is that the reductions in labor 

supply stemming from the ACA are expected to have a 

somewhat muted effect on total hours worked over the 

next two years or so, when there will still be some slack in 

the labor market. Thus, if some workers reduce the number of hours they work or leave the labor force altogether, 

some underemployed workers or people who are not 

actively looking for employment but are willing to work 

will probably be available to take their place. As a result, 

the ACA’s effects on labor markets are projected to be 

smaller in the near term—so the effects of repealing the 

ACA also would be smaller.

Aggregate Demand. CBO and JCT estimate that repealing the ACA would decrease aggregate demand for goods 

and services in the short-term—reversing the projected 

effects of the ACA and slightly dampening output over 

the next two years or so. On balance, implementation of 

the ACA is expected to boost overall demand because the 

people who will benefit from the expansion of Medicaid 

or from access to the exchange subsidies are predominantly in lower-income households and thus are likely to 

spend a large fraction of their additional resources on 

goods and services—whereas the people who will pay 

higher taxes are predominantly in higher-income households and are likely to change their spending to a lesser 

degree. Similarly, reduced Medicare payments to hospitals and other providers under the provisions of the ACA 

will reduce income and profits, but those changes are 

likely to decrease demand by a relatively small amount. 

Given the projected effects of the ACA in spurring 

demand and output to a small degree over the next few 

years, CBO and JCT estimate, repealing the ACA would 

have the opposite effect. 

Combined Short-Term Effects on Output. On balance, 

CBO and JCT estimate, the reduction in aggregate 

demand in 2016 that would stem from repeal of the 

ACA would roughly offset the rise in output caused 

by increases in labor supply and by the other factors 

described above, so projected output would be about the 

same in 2016 whether or not the law was repealed. Output would be higher, on net, in later years because the 

dampening effect on aggregate demand would wane 

and the other effects of repealing the ACA that boost 

output would strengthen—particularly the effects on 

labor supply. 

Budgetary Feedback From Macroeconomic Effects 

Taking into account the factors described above, CBO 

and JCT estimate that the macroeconomic effects of 

repealing the ACA would lower federal deficits by 

$216 billion over the 2016–2025 period. Most of that 

reduction would stem from an increase in revenues resulting from higher employment and taxable income, relative 

to projections under current law. Combined with the 

estimated effects of a repeal on federal deficits excluding 

macroeconomic feedback, the total result of changes in 

direct spending and revenues would amount to an 

increase in federal deficits of $137 billion over 10 years. 

CBO and JCT’s estimates of those macroeconomic feedback effects and the methods used to generate them 

depend in part on the types of provisions and categories 
18 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT JUNE 2015

CBO

of feedback being analyzed. In estimating the feedback 

effects on revenues of repealing the noncoverage revenue 

provisions and the excise tax on certain high-premium 

insurance plans, JCT projected macroeconomic effects and 

net effective tax rates for several different types of taxable 

income (including wages, interest, dividends, capital gains, 

and business income). In analyzing the coverage provisions—which affect the economy primarily through their 

impact on labor supply—CBO estimated that the resulting 

increases in GDP would raise revenues in a roughly proportional way, primarily because income and payroll taxes 

would rise with higher compensation and income. 

To estimate the effects of macroeconomic feedback on 

federal spending, CBO generally uses a simplified 

method that accounts for changes in GDP and interest 

rates, among other factors, but does not involve the sort 

of detailed program-by-program analysis that the agency 

uses for official cost estimates. As a rule, increases in GDP 

would have much smaller effects on federal spending 

than on revenues. CBO’s estimates for discretionary 

programs incorporate the assumption that spending 

generally remains at the amounts projected in its budgetary baseline even if output changes.21 For mandatory 

programs, CBO estimates, aggregate spending would be 

affected only slightly by a change in the rate of economic 

growth.22

The agencies’ analysis of macroeconomic effects on the 

federal budget includes effects on interest payments 

caused by changes in interest rates. In 2016 and 2017, 

the reduction in overall demand estimated in the event of 

a repeal of the ACA would slightly reduce interest rates 

and, as a result, federal interest payments. Over the longer term, however, repealing the ACA would be expected 

to increase interest rates slightly—by roughly 5 basis 

points, or five one-hundredths of a percent—because of 

the resulting increase in federal borrowing. Under current 

law, federal debt held by the public (on which interest 

payments are made) is projected to be about $14 trillion 

in 2016 and about $21 trillion in 2025, so even small 

changes in interest rates can have a noticeable effect on 

interest payments as that debt is refinanced.23

Overall, CBO and JCT estimate, the macroeconomic 

effects of repealing the ACA would increase federal revenues much more than they would affect federal outlays. 

Specifically, the increase in output that would result from 

repealing the ACA would boost revenues by $225 billion 

over the 2016–2025 period.24 By 2021, when the increase 

in output attributable to the legislation is estimated to 

reach 0.7 percent, the macroeconomic effects would 

boost federal revenues by nearly the same percentage—

or by about $27 billion. (Under current law, federal revenues are projected to total about $4.2 trillion in 2021.) 

In subsequent years, however, the feedback to federal 

revenues would shrink slightly as a share of total revenues 

because of the macroeconomic effects of the projected 

increases in federal borrowing. Outlays would primarily 

be affected by the estimated changes in interest rates, falling initially and then rising slightly in later years. On net, 

CBO estimates, the macroeconomic effects of repealing 

the ACA would increase outlays by $9 billion over the 

2016–2025 period.

Other Potential Effects on Output 

Implementation of the ACA—and consequently, its 

repeal—could affect GDP and other aspects of the economy in several other ways. In CBO and JCT’s judgment, 

however, those other effects generally would be small 

and probably would offset one another. For example, 

increases in insurance coverage stemming from the ACA 

could improve workers’ health or their job matches, 

which could in turn make them more productive. In that 

case, repealing the law would have the opposite effect. 

The evidence about such effects is limited, however. One 

recent study also found that past extensions of Medicaid 

21. Changes in projected prices and rates of inflation affect CBO’s 

projections of discretionary spending. CBO estimates that if the 

ACA was repealed, those macroeconomic effects would be small, 

resulting in an estimated reduction in discretionary spending of 

less than a billion dollars over the next decade.

22. For GDP growth, CBO recently estimated that a reduction in the 

real (inflation-adjusted) growth rate of 0.1 percentage point per 

year over the next decade—which would reduce GDP by about 

1 percent in 2025—would reduce mandatory spending only by 

$4 billion over that period. According to that rule of thumb, a 

corresponding increase in the rate of GDP growth over the next 

decade would be expected to increase mandatory spending by 

roughly the same amount. See Congressional Budget Office, The 

Budget and Economic Outlook: 2015 to 2025 (January 2015), 

Appendix C, www.cbo.gov/publication/49892. 

23. Reflecting a long-standing convention, CBO does not include in 

cost estimates the budgetary effects of changes in interest 

payments stemming from changes in the amount of debt 

incurred. However, the macroeconomic effects of those changes in 

interest payments are incorporated into the agency’s 

macroeconomic analysis. 

24. A portion of the $225 billion increase in revenues would come 

from increases in payments of Social Security payroll taxes, which 

are off-budget, but CBO cannot provide an estimate of that 

portion at this time. 
JUNE 2015 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT 19

CBO

eligibility for children increased their earnings and tax 

payments as adults.25 However, the ACA did not 

substantially change the number of children eligible for 

Medicaid, so that finding is not directly relevant to an 

analysis of the ACA or its repeal. 

At the same time, repealing the ACA could increase 

productivity through other channels. For example, productivity could fall, under current law, if businesses hired 

more part-time workers and fewer full-time workers as a 

way to avoid paying the penalties that the ACA imposes 

on larger businesses that do not offer health insurance to 

their full-time employees. In addition, businesses might 

invest less in their workers’ training because workers will 

find it easier than they did under prior law to change jobs 

without losing health insurance, and the resulting higher 

turnover reduces the return on such investments. Repealing the ACA could thus reverse those effects, but in any 

event such effects would probably be small. 

A repeal of the ACA also could affect saving rates by 

encouraging people to save more of their income to cover 

the expected costs of health care, which would in turn 

lower interest rates and boost output. Such effects would 

probably be small, however, and could be offset by the 

reinstatement of certain prior-law tests for Medicaid 

eligibility. Those tests limited the amount of assets that 

certain people could hold and still qualify for Medicaid, 

and reinstating those limits would, to a small degree, 

discourage savings.

Impact on the Economy and the 

Federal Budget Beyond 2025

Detailed, year-by-year projections of the effects of a 

repeal in years beyond 2025 would not be meaningful 

because the uncertainties involved are simply too great. 

Instead, CBO and JCT have made a rough assessment 

of the likely budgetary consequences in the decade 

after 2025 of repealing the ACA, with and without the 

effects of macroeconomic feedback. Both types of analysis indicate that repealing the act would increase deficits 

over the 2026–2035 period, and it seems likely that such 

legislation would result in higher budget deficits in later 

years as well. 

Effects Excluding Macroeconomic Feedback

To assess budgetary effects in the decade after 2025, CBO 

and JCT grouped the elements of the estimate into broad 

categories, examining their rates of growth towards the 

end of the 10-year budget window, and projecting the 

rate at which the budgetary impact of each category 

would increase over time—as the agencies did during 

consideration of the ACA and similar legislation in 2009 

and 2010, and when preparing their 2012 estimate of the 

effects of a repeal. Overall, CBO and JCT estimate that 

the direct spending and revenue effects of repealing the 

ACA would increase the federal deficit by $55 billion in 

2022 and by amounts that would rise to $118 billion in 

2025 (excluding the effects of macroeconomic feedback). 

For this analysis, the effects were grouped as follows:

 Net savings from repealing the ACA’s coverage 

provisions would total $133 billion in 2025, and 

CBO and JCT estimate that the savings would be 

growing by about 2 percent per year toward the end of 

the 10-year budget window. That estimate of slow 

growth reflects several factors, but one reason those 

savings would grow relatively slowly in that period 

(and in later years) is that the annual updates to 

exchange subsidies are structured in a way that will 

tend to slow their growth—which would limit the 

savings from a repeal.26 Another reason is that 

the revenues stemming from the excise tax on certain 

high-premium insurance plans will grow rapidly as 

more plans are affected by that tax, and the loss of 

those revenues would reduce the net savings from 

repealing the coverage provisions. 

 Repealing changes that the ACA made to Medicare, 

Medicaid, and other federal health programs—other 

than those associated directly with expanded insurance 

coverage—would cost a total of $168 billion in 2025, 

and CBO estimates that those costs would be growing 

by about 15 percent per year toward the end of the 

10-year budget window. That rapid growth would 

occur because repealing the ACA’s reductions in 

updates to Medicare’s payment rates would increase 

the growth rate of that program’s spending, and thus 

the costs of repealing those provisions would 

compound over the next decade.

25. David W. Brown, Amanda E. Kowalski, and Ithai Z. Lurie, 

Medicaid as an Investment in Children: What is the Long-Term 

Impact on Tax Receipts? Working Paper 20835 (National Bureau of 

Economic Research, January 2015), www.nber.org/papers/

w20835. 

26. For additional discussion of the provisions that govern the annual 

updates for exchange subsidies, see Congressional Budget Office, 

The 2015 Long-Term Budget Outlook (June 2015), pp. 33–34, 

www.cbo.gov/publication/50250. 
20 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT JUNE 2015

CBO

 Repealing the ACA’s revenue provisions that are not 

related to insurance coverage would result in revenue 

losses totaling $83 billion in 2025, and JCT estimates 

that those losses would be growing by about 6 percent 

per year toward the end of the 10-year budget 

window. 

Extrapolating the budgetary effects for each category 

using the growth rates described above yields an estimate 

that repealing the ACA would continue to increase 

federal deficits substantially in subsequent years. In particular, CBO and JCT conclude that repealing the ACA 

would increase federal budget deficits over the 2026–

2035 period, relative to the deficits that would occur 

under current law, by amounts that lie within a broad 

range around one percent of GDP. The imprecision of 

that calculation reflects the greater degree of uncertainty 

surrounding it relative to CBO and JCT’s 10-year 

estimates. 

Effects Including Macroeconomic Feedback

The same macroeconomic effects that would generate 

budgetary feedback over the 2016–2025 period also 

would operate farther into the future. However, the net 

savings stemming from those effects would start to 

decline after 2019, CBO and JCT estimate, and would 

continue to shrink after 2025. Although the increase in 

labor supply would continue to boost output and revenues in a roughly proportional way, the growing increases 

in federal deficits that are projected to occur if the ACA 

was repealed would increasingly crowd out private investment and boost interest rates. Both of those developments would reduce private investment and thus would 

dampen economic growth and revenues; the increase 

in interest rates also would increase federal interest 

payments. 

On balance, output would probably be higher over the 

2026–2035 period as a result of repeal, but incorporating 

the budgetary effects of macroeconomic feedback would 

not substantially alter the estimated increase in federal deficits over that period—which would remain within a broad 

range around one percent of GDP. Including the effects of 

macroeconomic feedback, a repeal of the ACA would 

probably increase deficits in subsequent years as well. 

Uncertainty Surrounding the Estimates 

Although CBO and JCT have endeavored to develop 

estimates that are in the middle of the distribution of 

potential outcomes, that distribution spans a wide range. 

Estimates of the budgetary impact of repealing the ACA 

are based in large part on projections of the law’s effects, 

which are themselves highly uncertain. Assessing the 

effects of broad changes made by the ACA in the nation’s 

health care and health insurance systems requires estimates of a broad array of technical, behavioral, and economic factors that are difficult to predict. For example, 

the effects of the ACA on insurance coverage depend on 

how individuals, employers, and insurers respond to the 

subsidies and penalties and related changes instituted by 

the act. Uncertainty about those factors translates into 

still more uncertainty regarding the budgetary effects of 

repealing the act’s insurance coverage provisions.27

As for the other provisions of the ACA, separating their 

incremental effects on outlays for continuing programs 

and existing revenue streams from other factors that affect 

those outlays and revenues can become more difficult and 

uncertain over time because more of those other factors 

may arise. The substantial discretion that would be 

given to executive branch agencies to determine how to 

implement a repeal of the ACA is yet another source of 

uncertainty. 

Several other sources of uncertainty stand out: the 

Supreme Court’s forthcoming ruling on exchange subsidies; the responses of providers over the longer term to 

the ACA’s reductions in Medicare’s payment updates; the 

degree to which the recent slowdown in overall spending 

on health care will persist, and the nature of the ACA’s 

role in that slowdown; and the law’s macroeconomic 

effects, particularly concerning labor markets. 

The Supreme Court’s Ruling 

Currently, a particular source of uncertainty involves the 

outcome of litigation regarding whether people may 

receive subsidies for coverage purchased through 

exchanges that are operated by the federal government 

rather than by a state government. The Supreme Court is 

expected to rule on that case later in June 2015. Until that 

27. One area of uncertainty involves the extent to which employers 

will continue to offer health insurance coverage to their workers 

under current law. However, CBO and JCT’s analysis found that 

even if the changes in employment-based health insurance 

differed substantially from those projected, they would have 

limited effects on the budgetary impact of the ACA because 

changes in the availability and take-up of such insurance affect 

the federal budget in several ways that are partly offsetting. See 

Congressional Budget Office, “The Effects of the Affordable Care 

Act on Employment-Based Health Insurance,” CBO Blog

(March 15, 2012), www.cbo.gov/publication/43090. 
JUNE 2015 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT 21

CBO

ruling is issued, CBO and JCT’s baseline projections reflect 

the way the ACA is currently implemented, which involves 

people in many states receiving subsidies through what are 

known as federally facilitated marketplaces or through 

exchanges established in partnership between the federal 

government and a state government. In the event that the 

Supreme Court ruled that those subsidies must cease, 

CBO and JCT would reduce their projections of spending 

under current law and would reduce their estimates of the 

savings generated by repealing the ACA’s coverage provisions. The magnitude of such changes would depend on 

the specifics of the Court’s ruling. If instead the Court 

ruled that the exchange subsidies are being issued properly, 

CBO and JCT’s baseline projections—and the estimates 

contained in this report—would not be affected by the 

Court’s ruling. 

Providers’ Responses to Changes in Payment Rates 

An important source of uncertainty in projecting 

health care spending under current law for the long 

term involves the way that providers will respond to 

scheduled restraint in annual updates to Medicare’s payment rates—and whether those responses will lead to 

offsetting increases or further reductions in spending for 

Medicare and other health care programs. The scheduled updates in the payment rates would generally fall 

below increases in the prices of inputs (namely, labor and 

supplies) used to deliver care. To keep the growth of their 

costs in line with the growth in those payment rates, providers could use fewer inputs per patient over time—that 

is, they could raise their productivity—or seek to control 

costs in other ways. If providers cannot achieve significant gains in productivity, they might reduce the quality 

of care offered to Medicare enrollees, reduce enrollees’ 

access to care (which might reduce spending), or seek to 

increase revenues by other means (which might increase 

spending).28 The nature of such responses, if any, under 

current law would also affect the budgetary consequences 

of repealing the ACA. 

Trends in Health Care Spending 

Substantial uncertainty also surrounds the question of 

whether repealing the ACA would affect spending for 

health care in ways that are not captured directly in the 

estimates presented above. Health care spending has grown 

more slowly in recent years than it has historically, both in 

absolute terms and relative to the pace of economic 

growth. But that slow growth might not persist under 

current law. Although many analysts attribute at least a 

portion of the slowdown to the effects of the recent recession and slow recovery, there is debate about the role of 

structural or other changes in the health sector and 

whether and how enactment of the ACA has encouraged 

those changes. Some considerations suggest that the 

effect of the ACA’s enactment may be limited: 

 CBO’s own analyses and other studies have shown 

that Medicare spending began to slow before the 

enactment of the ACA—and before the recession—

and CBO also found that the direct effects of the 

recession explained very little of that slowdown, 

suggesting that other factors were at work.29

 The overall slowdown in the growth of spending 

occurred when very few of the ACA’s provisions had 

been implemented in any substantial way, making it 

difficult to attribute much of the slowdown to the 

effects of specific provisions of that law. 

 At a more qualitative level, the last time health care 

spending grew at roughly the same rate as the 

economy for an extended period was in the mid- to 

late-1990s—after an unsuccessful attempt to enact 

major health care legislation—which suggests that 

attention to the issue rather than enactment of 

legislation could be an important factor. 

Nevertheless, it is difficult to dismiss the argument that 

implementation of the ACA’s provisions has in some way 

fostered a focus on cost control that has encouraged 

slower growth in spending. As one analysis concluded 

recently, however, “it is impossible to quantify how much 

the ACA has truly contributed to the reduced spending 

projections over time”—at least until more extensive data 

and analyses are available.30 Reflecting that view, CBO 

28. For additional discussion, see Congressional Budget Office, 

The 2015 Long-Term Budget Outlook (June 2015), pp. 38–40, 

www.cbo.gov/publication/50250. 

29. See Michael Levine and Melinda Buntin, Why Has Growth in 

Spending for Fee-for-Service Medicare Slowed? Working Paper 

2013-06 (Congressional Budget Office, August 2013), 

www.cbo.gov/publication/44513; and Chapin White and Paul 

Ginsburg, “Slower Growth in Medicare Spending—Is This the 

New Normal?” New England Journal of Medicine, vol. 366, no. 12 

(March 22, 2012), pp. 1073–1075, www.nejm.org/doi/full/

10.1056/NEJMp1201853. 

30. See John Holahan and Stacey McMorrow, The Widespread 

Slowdown in Health Spending Growth: Implications for Future 

Spending Projections and the Cost of the Affordable Care Act

(Robert Wood Johnson Foundation and Urban Institute, 

April 2015), p. 11, http://tinyurl.com/q7j6kkc.
22 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT JUNE 2015

CBO

and JCT have not incorporated such an effect into this 

estimate. But to the extent that such an effect has 

occurred and would continue under current law, repealing the ACA would generate a larger increase in federal 

deficits than is estimated here. Specifically, repealing the 

ACA would cause spending on Medicare and Medicaid to 

grow more rapidly—and the substantial costs of the tax 

preference for employment-based health insurance to 

grow more quickly—than is reflected in this estimate. 

Responses in Labor Markets 

Finally, there is considerable uncertainty surrounding CBO 

and JCT’s estimates of the macroeconomic effects of 

repealing the ACA, largely because of the uncertainty concerning the consequences of that law for labor markets. 

That uncertainty arises in part because many of the ACA’s 

provisions have been in place for less than two years and in 

part because estimates of how workers and businesses 

might respond vary considerably. CBO and JCT seek to 

provide estimates of macroeconomic effects that lie in the 

middle of the distribution of potential outcomes, but the 

actual effects of the ACA could differ notably from their 

estimates. For example, if fewer people obtain subsidized 

insurance coverage through exchanges under the ACA 

than CBO and JCT expect—or if those people respond 

less strongly to incentives regarding work than the agencies have estimated—then the effects of the ACA on 

employment and output would be smaller than estimated 

in this report (the same would be true for the cost of 

those subsidies). Alternatively, if more people obtain 

subsidized coverage through exchanges, or if the subsidy 

system affects their labor supply more strongly, then the 

ACA’s impact on the labor market and the economy (and 

the cost of subsidies) would be larger. The effects of 

repealing the ACA could thus be smaller or larger as well. 

Overall Magnitude of the Uncertainty 

Quantifying the variation in budgetary effects that might 

stem from any source of uncertainty is difficult, and 

trying to capture the likely effects for all of them simultaneously would be harder still. As a qualitative matter, 

however, the range of important uncertainties and the 

large flows of funds that are affected by the ACA suggest 

that the variation in budgetary effects of repealing that 

law could be substantial. Although CBO and JCT’s best 

estimate is that repealing the ACA would increase federal 

budget deficits by $137 billion over the 2016–2025 

period through its effects on direct spending and revenues, the effects on federal deficits of repealing the ACA 

could differ, in either direction, from the central estimates presented in this report by a sum that exceeds that 

amount. Thus, the uncertainty is sufficiently great that 

repealing the ACA could in fact reduce deficits over that 

period—or could increase deficits by a substantially larger 

margin than the agencies have estimated. 

For the decade after 2025, the estimated effects on deficits of repealing the ACA are so large as to make it substantially less likely that a repeal could reduce deficits. 

The range of uncertainty grows wider over time, however, 

because it becomes more and more difficult to project 

health care spending—a key driver of both the costs and 

the savings generated by the ACA. Over a long horizon, a 

wide range of changes could occur in people’s health, in 

the sources and extent of their insurance coverage, and 

in the delivery of medical care (reflecting factors such as 

advances in medical research, developments in technology, and changes in patterns of medical practice) that are 

likely to be significant but that are very difficult to predict, both under current law and under any proposal to 

repeal the ACA. 
JUNE 2015 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT 23

CBO

List of Tables and Figures

Tables

1. Summary of Estimated Effects on Direct Spending and Revenues of Repealing the 

Affordable Care Act 2

2. Estimate of the Direct Spending and Revenue Effects of Repealing the 

Affordable Care Act, Without Macroeconomic Feedback 3

3. Estimate of the Effects on Health Insurance Coverage of Repealing the 

Affordable Care Act 9

4. Estimated Changes in Direct Spending and Revenues That Would Result From 

Repealing the Affordable Care Act, Without Macroeconomic Feedback 11

Figures

1. Estimated Effects on Deficits of Repealing the Affordable Care Act 4

2. Comparison of Estimated Effects on Deficits of Repealing the Affordable Care Act 13

3. Evolution of CBO and JCT’s Estimates of the Net Budgetary Effects of the 

Insurance Coverage Provisions of the Affordable Care Act 14
24 BUDGETARY AND ECONOMIC EFFECTS OF REPEALING THE AFFORDABLE CARE ACT JUNE 2015

CBO

About This Document

This Congressional Budget Office report was prepared at the request of the Chairman of the Senate 

Budget Committee. In keeping with CBO’s mandate to provide objective, impartial analysis, this 

report makes no recommendations.

Philip Ellis wrote the report and contributed to the analysis with significant input from Benjamin Page. 

Thomas Bradley, Lori Housman, Paul Masi, Kevin McNellis, Jamease Miles, Lara Robillard, Erica Socker 

(formerly of CBO), Zoe Williams, and Rebecca Yip prepared the analysis of effects on Medicare. 

Chad Chirico, Julia Christensen, Kate Fritzsche, Daniel Hoople, Sarah Masi, Andrea Noda, 

Lisa Ramirez-Branum, Robert Stewart, and Ellen Werble prepared the analysis of effects on 

Medicaid, exchange subsidies, and other federal health programs. Jessica Banthin, Sean Lyons, 

Alexandra Minicozzi, Eamon Molloy, Romain Parsad, Allison Percy, Sam Trachtman (formerly of 

CBO), and Christopher Zogby contributed to the analysis of effects on Medicaid and exchange 

subsidies. The staff of the Joint Committee on Taxation contributed to the analysis of effects on 

exchange subsidies and revenue changes associated with employment-based health insurance and 

prepared the analysis involving revenue provisions. Paul Burnham, Devrim Demirel, Ed Harris, 

Janet Holtzblatt, Jonathan Huntley, Leah Loversky, Shannon Mok, Frank Russek, and the staff of the 

Joint Committee on Taxation prepared the analysis of the macroeconomic feedback. Linda Bilheimer, 

Wendy Edelberg, Theresa Gullo, Mark Hadley, Holly Harvey, and David Weiner provided guidance 

and helpful comments.

Jeffrey Kling and Robert Sunshine reviewed the report, Kate Kelly edited it, and Maureen Costantino 

and Jeanine Rees prepared it for publication. An electronic version is available on CBO’s website 

(www.cbo.gov/publication/50252).

Keith Hall 

Director

June 2015