Will the health care reform laws decrease the federal deficit?
Douglas W. Elmendorf, PhD, Director of the Congressional Budget Office (CBO), stated the following in a Jan. 6, 2011 letter to Speaker of the House John Boehner, available at www.cbo.gov:
"The Congressional Budget Office (CBO) has reviewed H.R. 2, the Repealing the Job-Killing Health Care Law Act, as introduced on January 5, 2011. That bill would repeal the Patient Protection and Affordable Care Act (PPACA, Public Law 111-148) and the provisions of the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152) that are related to health care. Both of those laws were enacted in March 2010...
CBO and JCT [Joint Committee on Taxation] estimated that the March 2010 health care legislation would reduce budget deficits over the 2010–2019 period and in subsequent years; consequently, we expect that repealing that legislation would increase budget deficits...
As a result of changes in direct spending and revenues, CBO expects that enacting H.R. 2 would probably increase federal budget deficits over the 2012–2019 period by a total of roughly $145 billion."
The Congressional Budget Office (CBO), wrote in its Mar. 20, 2010 report (untitled) on the estimated budgetary effects of the March 2010 health care reform laws, addressed to Nancy Pelosi, Speaker of the US House of Representatives, available on www.cbo.gov:
"CBO and JCT [Joint Committee on Taxation] estimate that enacting both pieces of legislation—H.R. 3590 and the reconciliation proposal—would produce a net reduction in federal deficits of $143 billion over the 2010–2019 period as result of changes in direct spending and revenues. That figure comprises $124 billion in net reductions deriving from the health care and revenue provisions and $19 billion in net reductions deriving from the education provisions."
The Center for American Progress (CAP), wrote in its May 2010 issue brief "The Impact of Health Reform on Health System Spending" available on www.americanprogress.org:
"The net effect is a federal deficit reduction of $400 billion over 2010–2019. This reduction results from several factors. As estimated by CBO, the federal cost of insurance coverage expansion is $788 billion. Savings from payment and system reform provisions are projected to generate $682 billion—more than is estimated by CBO, owing to the reasonable estimates of health system modernization provisions. Our federal tax revenue projection mirrors that of CBO's, though we also add in the additional revenue from employer savings and increased wages from modernization and lower administrative costs—projected to raise $86 billion over the 10-year, 2010–2019 period."
Peter R. Orszag, PhD, Former Director of the Office of Management and Budget (OMB), wrote in his Mar. 21, 2010 post "Fiscal Realities" on the OMB blog at www.whitehouse.gov:
"With momentum building, it's no surprise that opponents took to the morning talk shows and the Sunday newspaper op-ed pages in an attempt to undermine one of the signature accomplishments of the legislation under consideration today: the fact that it reduces the deficit by more than $100 billion over the first decade, and more than $1 trillion in the decade after that...
The legislation before the House represents the most important deficit reduction package that would be enacted in over a decade -- and, perhaps more importantly, represents the first serious piece of legislation that would begin the process of addressing our long-term fiscal imbalance by re-orienting the health system toward quality rather than quantity."
Paul N. Van de Water, PhD, Senior Fellow, and Jim Horney, PhD, Director of Federal Fiscal Policy, both at the Center on Budget and Policy Priorities (CBPP), wrote in their Mar. 25, 2010 article "Health Reform Will Reduce the Deficit,"
available at www.cbpp.org:
"Despite an official estimate by the Congressional Budget Office (CBO) to the contrary, some critics of the new health reform legislation — such as Rep. Paul Ryan and former CBO director and McCain campaign adviser Douglas Holtz-Eakin — charge that it will not reduce federal budget deficits because it relies on budgetary gimmicks or games. Careful analysis of these charges shows them to be misleading or inaccurate. They do not withstand scrutiny... Deficit-reduction legislation has been accounted for in exactly the same way in previous Congresses under both political parties."
Michael Tanner, Senior Fellow at the Cato Institute, stated the following in his Jan. 19, 2011 article "Five Myths about New Health Care Law," published in the Orange County Register:
"Myth: The health care law reduces the deficit.
It is true the CBO has officially 'scored' the health care bill as costing $950 billion and warns that repealing it would add $230 billion to the deficit. However, those numbers do not tell the whole story, nor do they reveal the bill's true cost.
For example, CBO estimates do not include roughly $115 billion in implementation costs, such as the cost of hiring new IRS agents to enforce the bill's individual mandate.
The CBO estimate also assumes Congress will not repeal an anticipated 23 percent reduction in Medicare spending (the so-called 'doc-fix'). But Congress already has postponed those cuts by a year, and no one seriously expects them to remain intact.
A true accounting of all the bill's costs suggests that repeal could actually reduce the budget deficit by as much as $700 billion over 10 years."
Douglas Holtz-Eakin, PhD, President of the American Action Forum and former Director of the Congressional Budget Office from 2003 to 2005, wrote in his Mar. 20, 2010 New York Times op-ed "The Real Arithmetic of Health Care Reform":
"In reality, if you strip out all the gimmicks and budgetary games and rework the calculus, a wholly different picture emerges: The health care reform legislation would raise, not lower, federal deficits, by $562 billion..."
Michael Cannon, MA, JM, Director of Health Policy Studies at the Cato Institute, wrote in his Mar. 20, 2010 FOXNews.com article "Do the Math -- Obamacare Would Increase Deficits by $59 Billion":
"To hear Democrats tell it, the CBO projects the legislation would cost a mere $940 billion over the next 10 years. The CBO said no such thing: that figure pertains only to provisions aimed at expanding health insurance. Other spending provisions bring the cost to $1.2 trillion.
Then there's the additional $208 billion that Democrats plan to spend on physicians who participate in Medicare. Democrats moved that into a separate bill to reduce the apparent cost of the main health care bill. Including that spending in the estimate completely wipes out the Obama plan's professed $138 billion of deficit reduction. After correcting for that gimmick (and accounting for how the two measures would interact), the CBO estimates really indicate that the Obama plan would increase federal deficits by $59 billion over the next 10 years."
James C. Capretta, MA, Fellow at the Ethics and Public Policy Center (EPPC) and former Associate Director of the OMB from 2001-2004, wrote in his article "Obamacare: Impact on Future Generations" posted June 10, 2010 on www.eppc.org:
"...[T]he impact on future taxpayers is likely to be much more adverse than CBO's estimates indicate...
The President and congressional leaders have argued that a primary benefit from the health law will be reduced long-term budget pressure and thus a brighter future for coming generations of taxpayers. But when the cost estimate is adjusted for omissions, gimmicks, double-counting, and unrealistic assumptions, it is clear that the new health law will increase the burden, not lessen it.
One recent estimate projects the bill will add more than $500 billion to the deficit over the next 10 years and $1.5 trillion in the decade following."
Paul Ryan, US Representative (R-WI), wrote in his Mar. 25, 2010 New York Times article "Fix Health Reform, Then Repeal It":
"The Democrats' fiscal arguments never did add up: they claim that their program will reduce the deficit even though the federal government will pick up the tab for more than 30 million uninsured Americans and subsidize millions more. Even after accounting for the $569 billion in tax increases and $523 billion in Medicare cuts, the true costs of this legislation — concealed by timing gimmicks, hidden spending and double-counting — will make the deficit explode, plunging us deeper into debt."