Will the health care reform laws decrease the federal deficit? – DEBATED
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 White House stated on its webpage "Deficit-Reducing Health Care Reform," available at www.whitehouse.gov (accessed Oct. 5, 2012):
"...by curbing the cost of uncompensated care, and ending unwarranted subsidies, health reform reduces the deficit by over $1 trillion over the next two decades.
In keeping with the President's pledge that reform must fix our health care system without adding to the deficit, the Affordable Care Act reduces the deficit, saving over $200 billion over 10 years and more than $1 trillion in the second decade. The law reduces health care costs by rewarding doctors, hospitals and other providers that deliver high quality care and making investments to fund research into what works.
Rising health care costs are a major driver of our long-term deficits, and getting them under control is crucial if we want to grow the economy, create jobs and compete in the world economy."
The Congressional Budget Office, in a July 24, 2012 article "Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision," available at www.cbo.gov, stated:
"CBO and JCT [Joint Committee on Taxation] now estimate that the insurance coverage provisions of the ACA will have a net cost of $1,168 billion over the 2012-2022 period-compared with $1,252 billion projected in March 2012 for that 11-year period-for a net reduction of $84 billion. (Those figures do not include the budgetary impact of other provisions of the ACA, which in the aggregate reduce budget deficits.)
The projected net savings to the federal government resulting from the Supreme Court's decision arise because the reductions in spending from lower Medicaid enrollment are expected to more than offset the increase in costs from greater participation in the newly established exchanges."
Phil Galewitz, MPA, Reporter for Kaiser Health News, in an Oct. 1, 2012 article, "Primer: How Will the Election Change Medicaid?," available at www.pbs.org, stated:
"The Medicaid expansion makes up a big chunk of the health law's $930 billion price tag over the next decade, according to the Congressional Budget Office. But the money won't increase the federal budget deficit because the law is being funded by new taxes and penalties. These include a new excise tax on high-premium insurance (Cadillac) plans, equal to 40 percent of premiums paid on plans costing more than $27,500 annually for a family, starting in 2018; an increase in Medicare payroll taxes on couples with income of more than $250,000 a year; and new fees on insurance companies, pharmaceutical companies and medical device manufacturers."
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."
Mitt Romney, JD, Republican Presidential candidate and former Governor of Massachusetts, stated in a June 28, 2012 press release, available at www.mittromney.com:
"Obamacare raises taxes on the American people by approximately $500 billion. Obamacare cuts Medicare, by approximately $500 billion. And even with those cuts, and tax increases, Obamacare adds trillions to our deficits and to our national debt and pushes those obligations on to coming generations."
Paul Howard, PhD, Senior Fellow and Director of the Center for Medical Progress at the Manhattan Institute for Policy Research, stated in a Feb. 9, 2011 Congressional hearing titled "The Impact of the Health Care Law on the Economy, Employers, and the Workforce" before the Committee on Education and the Workforce, available at www.gpo.gov:
"PPACA will Increase the Deficit, Not Reduce It...
The federal government is clearly committed to spending hundreds of billions more on Medicaid, the State Children's Health Insurance Plan (or SCHIP), and new subsidies for middle- and upper income-uninsured to buy health insurance on newly created state health insurance exchanges beginning in 2014...
Consequently, half-a-trillion dollars will be shifted out of the private economy and directed largely towards new health care spending. Not only will this reduce funds available for private sector job growth and innovation, but the funds are also lost for any future deficit reduction efforts...
Other analysts, after discounting the double-counting of revenues and cuts that are likely to be unsustainable, put the true deficit costs of the Affordable Care Act during its first 10 years at over $562 billion and second decade at over $1.5 trillion."
Charles Blahous, Senior Research Fellow at the Mercatus Center at George Mason University, stated in his Mar. 3, 2012 study "The Fiscal Consequences of the Affordable Care Act," available at www.mercatus.org:
"Over the years 2012-21, the ACA is expected to add at least $340 billion and as much as $530 billion to federal deficits while increasing federal spending by more than $1.15 trillion over the same period and by increasing amounts thereafter... Roughly two-thirds of the law's subsidies for health insurance exchanges must be eliminated to avoid worsening federal deficits and the entirety of their costs eliminated to avoid further increasing federal health care financing commitments."