Google+
Close

Critical Condition

NRO’s health-care blog.

Obamacare Will Break the Bank, Not Cut the Deficit



Text  



The White House and its congressional allies are trying to suggest that the latest Congressional Budget Office (CBO) cost estimate proves that their health-care plan is fiscally responsible.

But, in fact, the latest CBO projections confirm — again — that the president’s health plan would pile another unfinanced entitlement program on top of the unaffordable ones already on the federal books.

According to CBO, the new entitlement spending in the plan would cost $216 billion by 2019, and then increase by 8 percent every year thereafter. In other words, the president’s plan would stand up another health entitlement program that will grow much faster than the nation’s economy or revenue base. The changes the Democrats would make to the Senate-passed bill would make the entitlement program even more expensive.

Over a full ten years of implementation, the cost of the new entitlement spending would reach $2.5 trillion, at least, not the $1 trillion advertised by the White House.

The president and his congressional allies have suggested that the offsets they are pushing will more than cover this massive spending increase. But even a modest amount of scrutiny reveals these supposed offsets are nothing more than gimmicks and implausible assumptions.

For starters, as I mentioned yesterday, the plan doesn’t count $371 billion in spending for physician fees under the Medicare program. The president and congressional Democrats want to spend this money, for sure. They just don’t want it counted against the health bill. That’s because they want to reserve all of the Medicare cuts in the bill as offsets for another entitlement instead of using them to pay for the problem that everyone knows needs fixing. The president says he shouldn’t have to pay for the “doc fix.” But why not? Never before did Congress move to add the cost of a permanent fix to the national debt. But that is exactly what the president now wants to do. When the cost of the “doc fix” is properly included in the accounting, all of the claimed deficit reduction from the president’s health plan vanishes.

Then there’s the “Cadillac” tax on high-cost insurance plans. Because of union pressure, the president pushed the tax back to 2018, well past the point when he will have left office. But once in place, the threshold used to determine “high-cost” will rise only with the Consumer Price Index, beginning in 2020. That means a very large segment of the middle class would get hit with the tax as the years passed. The president has shown that he is unwilling to actually collect this tax on his own watch. But he wants us to believe that we can count on a huge revenue jump over the long run because his successors will have more stomach for it than he does.

Similarly, in jury-rigging “long-term deficit reduction,” the latest plan would first increase the premium assistance subsidies paid to low- and moderate-wage families above the levels in the Senate-passed bill, but then index their value to something below the growth in premiums to give the appearance of deficit reduction in the decade after 2019. There’s no “bending of the cost-curve” here. It’s sleight of hand that, if actually implemented, would force millions of low-income families to pay ever-higher premiums every year. The Democrats don’t want to talk about that. They just want to pretend they have been serious with fiscal discipline.

The other gimmicks remain in the plan as well: The double-counting of premiums for long-term care insurance programs as an offset for the health entitlement spending. The assumption that Congress will allow Medicare reimbursement rates to fall so low that one in five hospitals and nursing homes might be forced to stop taking Medicare patients. And the expectation that somehow Congress can hand out generous new subsidies to those getting insurance through the exchanges, even though many tens of millions of others with the same resources would get no additional help for their job-based coverage.

The bottom line here has been clear for months. The bill being pushed by the president would take what’s already a very bleak budget outlook and make it much, much worse.



Text  


Subscribe to National Review