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Re: Obamacare and the Deficit



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Yuval beat me to it this morning. But yes, there is a new study by my Mercatus Center colleague Chuck Blahous showing that President Obama’s health-care law will add more than $340 billion to the nation’s already deep budget problems over the next decade. That’s a significant departure from the claims by the administration and its advocates that the bill would reduce the deficit.

Blahous explains:

The widespread perception that the ACA might instead improve the outlook is based largely on a misunderstanding of how prevailing agency scoring conventions contrast with literal law. Many of the cost- savings measures under the ACA were already required in some form under previous law, and thus their combination with a substantial expansion of federal health entitlements unambiguously worsens the nation’s fiscal predicament. Given that many of the ACA’s other cost-saving provisions are highly susceptible to weakening by future lawmakers, the total fiscal damage wrought by the ACA is likely to be severe indeed in the absence of near-term legislative corrections.

Here is a chart from  the paper that compares the competing scoring methodologies:

 

The Washington Post does a good job this morning explaining Blahous’s methodology and also offers a quote by Rich Foster the Medicare actuary:

CBO and Medicare actuaries acknowledge the double-counting issue. “In practice, the improved [trust fund] financing cannot be simultaneously used to finance other federal outlays (such as the coverage expansions) and to extend the trust fund, despite the appearance of this result from” traditional budget rules, Medicare actuary Rick Foster wrote last year.

And in 2010, the CBO wrote that, absent the Medicare savings, the law would increase deficits by $226 billion through 2019 — instead of decreasing them by the commonly cited $132 billion.

For more on this issue check the website that Mercatus rolled out this morning. It contains papers and charts to complement the study. Blahous’s paper is here.

Here is the Washington Post article and here is what the Medicare Trustees Report had to say last year about the state of Medicare post-adoption of Obamacare.



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