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Critical Condition

NRO’s health-care blog.

The Repeal Windfall



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As November approaches, Obamacare’s defenders are quite plainly desperate. They see public opinion solidly against them, and a devastating election fast approaching. Their latest gambit to protect what was jammed through Congress in March is to claim that repeal would be so costly to the federal budget that it would be impossible to pass, even with overwhelming popular support. That’s the spin some on the left put on a recent letter from the Congressional Budget Office (CBO) to Sen. Mike Crapo.

But unfortunately for these advocates, that’s not what the CBO letter says. CBO’s message to Senator Crapo actually just states what is already obvious: If an effort were made to repeal just the Medicare cuts in the new law, it would, on paper, increase Medicare spending, and thus the federal budget deficit, by about $450 billion over ten years. Moreover, enacting a real “doc fix” to avoid deep and unrealistic cuts in Medicare physician fees will cost another $300 billion or so over the coming decade.

What this communication from CBO actually confirms, however, is that, contrary to White House assertions, Obamacare is a budget buster of the highest order. The claim that it would reduce the budget deficit over the coming decade has always rested on a series of gimmicks, implausible assumptions, and sleights-of-hand that have been exposed repeatedly over the past year, most especially by Rep. Paul Ryan in the presence of President Obama. Among the most egregious deceptions is the double-counting of cuts in Medicare’s reimbursement rates for hospitals and other providers of care — cuts so deep that they would push Medicare’s rates below those paid by Medicaid by the end of the decade. Even if these cuts were realistic — which they aren’t — they can’t both be used to pay for a new entitlement and to improve Medicare’s solvency, as the White House claims. The same money simply can’t be spent twice. Moreover, this money is almost certainly never going to materialize anyway because, as Medicare’s chief actuary has warned repeatedly, they would seriously reduce access to care for seniors by driving hospitals and physicians out of the program. It is all but inevitable, therefore, that Congress will step in at some point to reverse the “cuts,” and probably sooner rather than later. When that happens, it will only confirm what’s already abundantly clear — that these unsustainable payment reductions should never have been allowed to grease the way for a permanent and massively expensive entitlement program.

Indeed, contrary to latest spin from the left, not only would repeal not bust the budget, it would in fact produce a budgetary windfall of such enormous size that it could pay for a sensible reform of American health care and for deficit reduction too.

The centerpiece of Obamacare is the largest expansion of entitlement spending in a generation. CBO estimates that the new law will add 35 million people to the federal government’s health-entitlement rolls by decade’s end — and that’s almost certainly a lowball estimate. Gross federal spending for this added entitlement burden, plus various other spending provisions in the bill, is expected to reach $233 billion in 2019 alone, and then grow at a rate of about 7 percent annually every year thereafter. That means Obamacare’s spending will total at least $3.4 trillion over its second decade, on top of the $1.1 trillion it will cost between now and 2019. And it’s likely to be much more than that when more realistic assumptions about employer dumping of coverage are factored into the estimates.

So that’s at least $4.5 trillion in federal spending that would be avoided over the next 20 years if Congress moved ahead with repeal. Even in Washington that’s a lot of money. So much in fact that it should be more than enough to gut Obamacare’s most egregious tax hikes and spending “offsets” while still paying for a sensible reform of American health care that actually cuts costs and covers more people. And even after enacting this kind of “replacement” program, there should still be something left over to put a real dent in the massive deficits projected to occur under the Obama budget plan.

A couple of weeks ago, the Left’s message gurus put out the word to Democratic candidates to abandon talk of the supposed cost-cutting that would occur under Obamacare.

They now understand that the public has not, and will not, buy the argument that a government takeover of American health care will somehow lower costs. Americans have long understood that Obamacare is a massive new spending commitment, piled on top of the unaffordable ones already on the federal books. That’s a recipe for financial disaster, not deficit cutting. The solution is repeal coupled with a reform that puts consumers, not the government, in charge of controlling costs. That’s the way to fix health care — and the budget too. And, yes, it can be done.



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