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Obamacare’s Fiscal Time Bomb
Claims that Obamacare will reduce the deficit are breathtakingly naïve.


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Avik Roy

In other words, the projection of $109 billion is absurdly low; it underestimates Obamacare’s cost by trillions of dollars.

In a recent Politico column, former budget officials Douglas Holtz-Eakin and James Capretta calculated what would happen if the CBO’s estimates were somewhat off. By their math, if the households below 250 percent of the federal poverty line ($55,125 for a family of four) that now have employer-sponsored health insurance were to migrate to Obamacare’s exchanges, spending on those exchanges would more than triple, resulting in trillions of dollars in additional liabilities.

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It gets worse. Holtz-Eakin and Capretta’s assumptions are actually quite restrained. What happens if even more people take advantage of subsidies? What happens if Medicaid spending grows at faster rates than Obamacare anticipates? We could be talking about much, much more than $200 billion a year in additional spending.

There was a time, not so long ago, when annual federal deficits of $200 billion would be described with alarm. For Obamacare, they’re just a rounding error.

— Avik Roy is an equity research analyst at Monness, Crespi, Hardt & Co. in New York City. He blogs on health-care issues at The Apothecary.



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