Much has been made recently, on NRO as elsewhere, about the supposedly skyrocketing cost of Obamacare. The House Republican Policy Committee, for instance, put out a statement claiming that “the new CBO projection estimates that the law will cost $1.76 trillion over 10 years — well above the $940 billion Democrats originally claimed.”
This claim, that the CBO’s 2012 estimate suggests Obamacare will cost twice as much as originally projected when the bill was passed in 2010, has been widely trumpeted, by some rather doggedly, as another Obamacare failure, but unfortunately, it’s entirely dishonest accounting, as a range of liberal bloggers have pointed out.
Here’s why: The gross costs of Obamacare’s insurance coverage in the CBO’s 2010–2019 estimate were indeed $940 billion (table 2, page 2, here). The updated estimate covers the years 2012–2022, in which the gross costs will be $1.76 trillion, which is, yes, almost double the other number (table 2, here). But these numbers aren’t remotely comparable.
They cover similar amounts of time (10 years and 11 years), but different years, so the outlays should be different. Almost the entire difference in the two numbers is due to the fact that the new assessment includes 2020, 2021, and 2022, years of full implementation of coverage provisions, while excluding 2010 and 2011, during which basically no money was spent on the coverage provisions.
Pretending that the $940 billion number has been revised to $1.76 trillion is like comparing Tom Brady’s first through eighth seasons in the NFL with his third through eleventh (though probably only Paul Krugman thinks of government spending as a touchdown pass). Gross costs in each year haven’t really changed — e.g., in 2019, the old, 2010 estimate predicted a gross cost of $216 billion, the new estimate is $224 billion (the net costs of coverage have consistently decreased from the old estimate to the new — in 2019, say, from $175 billion to $149 billion).
Another more accurate comparison would be the original projection for costs from 2012–2019, and the updated projection for those years: In 2010, the CBO projected it would be $933 billion; now it’s expected to be $1.011 trillion. Not exactly a doubling in cost. (Plus, as noted, net costs are actually lower over that time.)
None of this, of course, indicates that Obamacare is anything less than the Brobdingnagian bureaucracy we’ve always known it to be. And there was indeed plenty of fishy accounting in the bill (the late CLASS Act being a perfect example). But the CBO’s new projections don’t substantially alter the picture we got in 2010, and it’s utterly dishonest to claim otherwise.
Of course, in 2010, many opponents of the bill noted that the supposed ten-year gross costs of the plan reflected only six years of coverage costs from full implementation — but the CBO does ten-year economic and fiscal projections, and therefore in their first estimate was only going to include the years through 2019. But their annual projections for each year of full implementation were accurate. Now, we see the costs of Obamacare through 2022, and they’re not different from what we expected they would be in 2010.
The bill’s gross costs will be huge; ten years of full implementation, from, say, 2015–2025, will cost more than $2 trillion, since the bill ticks in at $250+ billion per year after 2021. This fact was perfectly evident in the 2010 estimate, which projected similar annual costs for years of full implementation, but it is worth noting that, in this sense, 2012–2022 is a closer approximation of the full size (though not net cost) of Obamacare than 2010–2019 and at $1.7 trillion, still isn’t even big enough.