The Corner

Charles Blahous Responds to Chait & Krugman Re: Obamacare and the Deficit

Yesterday, after Chuck Blahous published his study projecting that Obamacare would increase the deficit by between $346 and $527 billion over the next ten years, Jonathan Chait and Paul Krugman came to the law’s defense, calling Blahous’ work “bogus” because it assumes, as per the law, that the Medicare Trust Fund stops spending money once it becomes insolvent. “Nobody, and I mean nobody, tries to assess legislation” this way, said Krugman.

Over at my Forbes blog, Blahous has posted a rebuttal to the Chait/Krugman critique. “Perhaps the most striking aspect of the criticisms has been that so few of them have been substantive,” Chuck writes. He concludes:

In sum, the literal change in law effectuated by the ACA clearly increases federal deficits, as even the critics of the study have conceded. Beyond this, however, the empirical evidence contradicts the critics’ theory that the hypothetical scorekeeping convention is a better guide to future events, specifically as they relate to the practical budgetary impact of the ACA. Both by statute and as a matter of political economy realities, the ACA clearly worsens the fiscal outlook.

One final note: another criticism–that this scorekeeping convention has been in use for decades and is often abused by Democrats and Republicans alike–is true but at least irrelevant, at worst misleading. My study devotes a couple of pages to endorsing the use of the scorekeeping convention for many policy evaluation purposes, but points out that it also has drawbacks such as obscuring the worsening of federal finances under the ACA. The fact that the convention is longstanding does not change its substantive imperfections.

More importantly, it has never before been put to the use that it has with the ACA: specifically, to depict a law that increases federal health care financing commitments by trillions of dollars over the upcoming decades as somehow improving federal finances. I believe we all benefit from a full understanding of how prevailing scorekeeping conventions have obscured the problematic fiscal consequences of a significant change in enacted law.

More here.

Avik Roy is a senior fellow at the Manhattan Institute and the author of The Apothecary, the Forbes blog on health-care and entitlement reform. You can follow him on Twitter at @aviksaroy.

Avik Roy — Avik Roy is the President of the Foundation for Research on Equal Opportunity (FREOPP.org), a non-partisan, non-profit think tank.

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