Google+
Close
A Decade of Obamacare Will Cost $1.6 Trillion
The CBO numbers need reexamining.


Text  


Michael Barone

How much will Obamacare — call it the Patient Protection and Affordable Care Act if you like — cost over the next ten years?

More than you’ve been led to believe, reports Charles Blahous of George Mason University’s Mercatus Center. To be specific, he projects it will add $1,160 billion to net federal spending over the next ten years and at least $340 billion to federal budget deficits in that time.

Blahous was appointed by Barack Obama as one of two public trustees of the Social Security and Medicare programs. He worked on these issues in George W. Bush’s administration and submitted his Mercatus paper for anonymous peer review.

Why does he say Obamacare will increase spending when the Obama administration, citing Congressional Budget Office numbers, promised it would save money?

Advertisement
One reason is that the CBO said Obamacare’s “Class Act” provisions would save money, since the government would collect premiums immediately but not pay off policyholders until later.

But Health and Human Services Secretary Kathleen Sebelius has conceded that the Class Act is unworkable, and so Blahous zeroes out those phantom savings.

Another reason Obamacare was supposed to save money is that it raises the Medicare tax 0.9 percent for high earners. It then dedicates those resources both to Medicare and to general revenues, with the CBO counting the savings twice.

That’s because under a 1985 internal ruling (not a full-fledged law passed by Congress), the CBO scores the costs of legislation against a hypothetical baseline rather than against current law.

But, as Sebelius conceded to Congress in March 2011, that’s double counting. The government can’t spend the same money twice. Medicare tax revenues dedicated to current Medicare spending can’t be used to reduce the budget deficit. That’s true “in practice,” Medicare chief actuary Richard Foster wrote last year, despite the CBO’s scoring procedure.

And, as Blahous points out, if the funds don’t go to Medicare, then under current law, Medicare will go broke faster and be forced to reduce benefits. Since Congress is not likely to let that happen any sooner than it has to, the deficit reduction promised by the CBO score and claimed by the Obama administration simply ain’t going to happen — no how, no way.

To all of which the Obama White House says only that the CBO numbers should count and that Blahous worked in a Republican administration. This is about as intellectually serious a reply as, “Nyah, nyah, nyah, nyah, nyah, nyah.”

Which is what we are coming to expect from the Obama White House. Consider the president’s Supreme Court trash-talking earlier this month.



Text