Obamacare’s Doubtful Deficit Reduction
The law’s cost controls are economic and political fantasy.


Kevin D. Williamson

The history of Obamacare is a litany of broken promises and daft optimism: If you like your coverage, you can keep it. Your premiums will be lower. “Obamacare implementation’s going to be great and people will love it.” Some of those promises have fallen apart all at once, but a key one is slipping away bit by bit, like the child’s sand castle that constitutes a beloved triumph for 20 minutes before being abandoned to the tide: the promise that the Affordable Care Act will reduce the deficit.

Ezra Klein, a practitioner of the “I would gladly pay you Tuesday for a hamburger today” school of budget analysis, has forwarded the claim that the law will reduce the deficit by some $1 trillion in its second decade — although he is more confident in that prediction than is the Congressional Budget Office, the source he cites for it, which habitually describes its ACA projections as “highly uncertain.” Still less certain is the Government Accountability Office, which has a hilarious name but whose insights into the Affordable Care Act are no laughing matter. Like the Medicare trustees, the Office of the Chief Actuary of Medicare, the CBO, and most everybody whose professional reputation is not intertwined with the purported technocratic brilliance of Obamacare, the GAO has some serious reservations about whether Congress and the White House will be both willing and able to enforce all of the cost-saving measures in the bill — including significant Medicare reductions — as well as the tax increases packaged with them.

The question of whether the ACA will increase or reduce the deficit turns on an ever-decreasing margin. In February 2011, the CBO estimated that repealing the ACA would add $210 billion to the deficit over ten years. (Because of the complex nature of the law, the impact of ACA on the budget and the impact of repealing ACA are not, as the CBO notes, the same number with the signs reversed. But repeal is what the CBO is estimating.) In May of this year, Representative Paul Ryan asked the CBO to estimate the deficit impact of repealing ACA, and the answer he got was that repeal would add only $109 billion to the deficit over the period from 2013 to 2022, a considerably smaller number that reflects the moving-target character of these projections. That $109 billion figure has to be taken in the context of the CBO’s projection of a cumulative deficit of $6.1 trillion during that period. The CBO’s best-case scenario, which assumes full and effective implementation of both cost-controlling and tax-increasing aspects of ACA, achieves a 1.8 percent reduction in the deficit over the coming decade. Not nothing, to be sure, but not a figure that leaves a lot of room for small political concessions, such as failing to hold the line on the cost of exchange subsidies or softening up on unpopular Medicare cuts, that would make this deficit-reducing bill into a deficit-increasing one.


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