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Congressional Budget Office cuts estimates for health reform costs

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(Reuters) — U.S. Congressional forecasters on Monday once again cut their estimate of health care reform insurance coverage costs, citing unexpectedly less spending on premium subsidies and lower enrollment rates through exchanges set up under the 2010 reform.

The $142 billion cost reduction over 10 years from the Congressional Budget Office's previous estimate in January was good news for supporters of the Patient Protection and Affordable Care Act as the Supreme Court ponders another challenge to the controversial law.

The nation's highest court last week heard arguments from conservative opponents of the health restructuring who say tax subsidies to help low- and moderate-income people afford health insurance should not be allowed in the 34 states that rely solely on federally run insurance exchanges.

The exchanges set up under the health law, President Barack Obama's landmark domestic achievement, are online marketplaces where consumers can shop for different plans. Republicans have fought tooth-and-nail against the exchanges and other provisions of the law, describing the reforms as a massive and unnecessary government intrusion into the private sector.

But the CBO and the Joint Committee on Taxation said those subsidies now are expected to be lower because insurance premium costs have run below previous estimates.

They also again lowered their forecast of the number of people who were expected to enroll in the exchanges, which reduces the need for subsidies. That number is expected to fluctuate between 22 million and 24 million from 2017 through 2025, compared to between 24 million and 25 million in the January forecast.

White House spokesman Josh Earnest called the estimates "the latest in a long line of data points that indicate the Affordable Care Act is contributing in a very positive way to holding down the growth of healthcare costs in this country."

The lower health insurance costs also contributed to a net $431 billion reduction in the CBO's estimate of cumulative 10-year U.S. budget deficits, now forecast at $7.209 trillion.

Also contributing to the lower deficits for the fiscal 2016-2025 period were reduced estimates for interest payments on the federal debt, slightly lower costs for the Medicare health program for seniors, and slightly higher anticipated tax revenues.

The CBO revised its fiscal 2015 deficit forecast to $486 billion, up $18 billion from the January estimate, due to technical changes to cost estimates for federal benefits including Medicare, the Medicaid health program for the poor, and some student loan programs.

The change means that this year's deficit is now expected to be slightly higher than last year's $483 billion budget gap.