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Obamacare Budget Bombshell

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Then: In his September 9, 2009, speech to a joint session of Congress, President Obama declared, “I will not sign a plan that adds one dime to our deficits—either now or in the future.”

Now: Over the next 75 years, the Affordable Care Act—Obamacare—will add an estimated $6.2 trillion to the primary deficit under the most realistic outlook on federal spending, according to a new report by the Government Accountability Office (GAO), the nonpartisan fiscal watchdog of Congress. The primary deficit, as noted by the GAO, is the difference between federal revenues and non-interest spending.

Senator Jeff Sessions (R–AL), who commissioned the study, released its findings this morning at a Senate Budget Committee hearing. The GAO report examines the long-term impact of Obamacare on the nation’s fiscal health.

Projections of spending and deficits and debt, as the GAO analysts observe, are often calculated under the “Baseline Extended Simulation,” which assumes that current law will “continue unchanged.” These projections can also be calculated under an “Alternative Simulation,” which assumes “historical trends and policy preferences continue.” Different assumptions lead to very different results.

Read the rest on The Foundry…

Tags: $6.2 trillion, budget, debt, deficit, GAO, long-term impact, ObamaCare

CBO: Obamacare to Cover Millions Fewer Than Before Supreme Court Decision

Earlier today, the Congressional Budget Office (CBO) released an updated cost estimate for Obamacare that showed that the law will cost less over 10 years than last predicted—because fewer people will be covered.

Now, although Obamacare spends more than $1 trillion, CBO predicts it will leave 30 million Americans uninsured, falling far short of what was promised.

The reason for the changes to the law’s cost projection is the recent Supreme Court ruling. Though the Court allowed Obamacare’s individual mandate to stand as a tax, it deemed a separate provision—the Medicaid expansion—to be unconstitutional. As a result, states can choose not to expand their Medicaid programs and are no longer at risk of losing all their federal Medicaid dollars if they don’t. As Heritage health policy expert Nina Owcharenko explains, “If the Administration’s attempt to centralize health care decision making in Washington was unworkable, its unconstitutional imposition on the states has made its problems even worse.”

Read the rest on The Foundry…

Tags: CBO, deficit, ObamaCare, repeal the law, Supreme Court ruling, total cost, unconstitutional, uninsured

Chart of the Week: Obamacare’s Bundle of Budget Gimmicks

President Obama has touted reports from the Congressional Budget Office claiming his health care law would actually decrease the deficit. But due to a bundle of budget gimmicks and other legislation, calculations show that Obamacare actually adds $698 billion to the deficit. This week’s chart outlines each of those budget gimmicks.

“This morning a new analysis from the Congressional Budget Office concludes that the reform we seek would bring $1.3 trillion in deficit reduction over the next two decades. That makes this legislation the most significant effort to reduce deficits since the Balanced Budget Act in the 1990s,” Obama declared two years ago.

(Read the rest on The Foundry…)

Tags: Balanced Budget Act, CBO, chart, deficit, Federal Budget in Pictures, health care law

Another Obamacare ‘Glitch’ Will Add Billions to the Deficit

A new report from Cornell economist Richard Burkhauser and his colleagues has once again called into question the claims of the Congressional Budget Office (CBO) and White House that Obamacare would have only a minimal impact on employers’ decisions to offer their employees health care. The report warns that Obamacare could cost at least $50 billion more per year than originally thought.

The controversy centers on the “firewall” provision in the health law, which applies to employer plans with premiums equaling more than 9.5 percent of a worker’s income. If a worker would have to pay more than this amount to buy qualified health coverage from his employer, then that coverage is deemed “unaffordable,” which makes him eligible to obtain subsidized health insurance in the newly established health exchanges starting in 2014.  (Read the rest at The Foundry…)

Tags: CBO, deficit, employer-sponsored insurance, firewall provision, ObamaCare, qualified health coverage

Two Cheers for the Coburn–Lieberman Medicare Proposal

Senators Tom Coburn (R–OK) and Joseph Lieberman (I–CT) unveiled a major Medicare proposal. Based on preliminary estimates provided by the Congressional Budget Office (CBO), the proposal would reduce total Medicare spending by more than $600 billion in the next 10 years and cut the program’s long-term (75-year) unfunded liability by approximately $10 trillion.

This is a serious start. Without remedial action, Medicare faces a long-term unfunded liability of almost $37 trillion. The Medicare hospitalization trust fund is running a deficit of $34.1 billion this year alone. While the program has become an engine of deficits and debt, the first step toward reform is revamping the traditional Medicare program. That is what the Coburn–Lieberman proposal would accomplish. The next step would be to move the program from a defined benefit to a defined contribution for the coming generation of retirees.  (Read the rest on The Foundry…)

Tags: deficit, entitlement reform, Medicare reform, Sen. Joe Lieberman, Sen. Tom Coburn

Take CBO Report With a Grain of Salt: Obamacare Repeal Would Not Increase Deficits

Next week, the House of Representatives will vote on H.R. 2, a measure to repeal Obamacare in its entirety. The Congressional Budget Office (CBO) today released a report stating that repealing the health care law would increase the deficit by $145 billion between 2012 and 2019.

This report is based on the findings of the CBO’s March 2010 report that predicted that Obamacare would reduce the deficit. CBO does respectable work, but their analysts have their hands tied by assumptions they are required to make. The reality is that, in spite of the March report, Obamacare will not reduce the deficit, so repealing it would not add to the deficit, in spite of today’s report.

The CBO report should be taken with a grain of salt for a few reasons. First, CBO is required to assume that current law will be enacted as written, even in cases where reality couldn’t be further from what is on the books. CBO Director Doug Elmendorf himself makes this clear in the report: (Read the rest at The Foundry…)

Tags: CBO, CBO Director Doug Elmendorf, deficit, ObamaCare

Repeal Doesn’t Increase the Deficit

When now-House Minority Leader Nancy Pelosi (D–CA) was sworn in as Speaker on January 4, 2007, the national debt stood at $8.67 trillion. By the time Pelosi surrendered the gavel to Speaker John Boehner (R–OH) yesterday, the national debt stood at $14.01 trillion. At $5.34 trillion, that means Speaker Pelosi added more than $1 trillion in debt per year during her tenure as Speaker. And yet she has the audacity to tell reporters Tuesday: “Deficit reduction has been a high priority for us. It is our mantra, pay-as-you-go.”

Only someone so out of touch with reality that they could claim that “deficit reduction” has been their “highest priority” while simultaneously adding more than $1 trillion a year to the debt could possibly claim that repealing Obamacare would add to the debt. But that is exactly what Pelosi wants us to believe. Also on Tuesday she claimed that repealing Obamacare would do “very serious violence to the national debt and deficit.” Nothing could be further from the truth.

While the CBO did produce a report projecting that Obamacare could produce $124 billion of savings over its first 10 years, no honest and intelligent person believes that that score will ever become reality. Not even the CBO. CBO Director Doug Elmendorf wrote: “CBO’s cost estimate noted that the legislation maintains and puts into effect a number of policies that might be difficult to sustain over a long period of time.” Elmendorf then goes on to identify a number of specific Obamacare policies, such as arbitrary reductions in the growth rate for Medicare spending, that anyone who follows health care policy knows will be impossible to actually implement.  (Read the rest at The Foundry…)

Tags: CBO cost estimates, debt, deficit, Nancy Pelosi, repeal Obamacare

Settling the Question of a Real Estate Tax in Obamacare

By now, Americans have become well acquainted with the fact that the Patient Protection and Affordable Care Act (PPACA) will have a multitude of adverse effects. The new law is certain to add to the federal deficit. It increases taxes on all Americans in a number of different ways, encourages employers to dump coverage, and will cause many to lose their current health plan. However, a circulating claim that the PPACA includes a tax on real estate sales has misinformed the American public.

There is not a new specific tax on all real estate transactions in the PPACA. But that’s not the end of the story. There is a surtax on real estate transactions that are already taxed under current law. Capital gains in excess of $500,000 from the sale of primary residences already face the capital gains tax. The new tax in the PPACA will raise the rate on these gains.

The Tax Foundation clears the air by explaining how the new tax will work: (more…)

Tags: adverse effects, deficit, dump coverage, ObamaCare, real estate tax, sales tax

Bringing Leviathan to Life: Experts Look at ObamaCare Implementation

A June Health Affairs briefing on the implementation of the Patient Protection and Affordable Care Act (PPACA) showed just how deep the chasm is between many of Washington’s policy experts and ordinary Americans. At the briefing, panelists discussed the potential impact and implementation of the ObamaCare amidst the public’s uncertainty over the law’s provisions and unintended, consequences.

The panelists discussed three main issues: If the reform law would bend the cost curve down; the states’ role in reforming insurance markets; and the state impact of expanding Medicaid.

Harvard Professor David Cutler said the law could lower costs because there is so much waste in the health system. He focused on the potential for the general improvement of information technology. Following Cutler, Michael Ramlet spoke about his paper with Douglas Holtz-Eakin. They estimated that the new law will cost the government far more than projected, and that it would not, as promised, end up reducing health costs for the American worker. (more…)

Tags: deficit, federal takeover, HHS, Medicaid, ObamaCare

Side Effects: Cost Of Medicaid Expansion Going Nowhere But Up

In passing Obamacare, Congress has put the states in quite a pickle. To sharply expand health coverage, Obamacare flung wide the gates of Medicaid eligibility. It envisions a massive expansion of the federal-state health program that, historically, delivers low-quality care to low-income Americans.

Not a smart move.

States were already struggling to meet their share of Medicaid program costs—even though Medicaid payments to providers often don’t even cover the cost of care. And, due to the inadequate reimbursement rates, more and more doctors were already refusing to accept new Medicaid patients.

How fiscally shaky is Medicaid today? Well, last year Congress used the stimulus bill to give states $87 billion to help them cover rising Medicaid costs. And that doesn’t seem to be enough.

A recent letter from House Democrats encourages their colleagues to give states another $24 billion to help them cover Medicaid costs for another six months. “Without this funding,” the letter says, “our states will be forced to make severe cuts to Medicaid providers and benefits, and the ensuing budget shortfall would have grave consequences for school funding and other essential state programs.” (more…)

Tags: deficit, federal-state program, low-quality care, Medicaid Expansion, ObamaCare, Side Effects