Will ObamaCare save the American people money or add to the deficit? This is one of the key questions over repeal of the law.
Supporters of ObamaCare claim that repeal would actually increase the deficit. This claim relies on a Congressional Budget Office estimate that ObamaCare will reduce the deficit by about $230 billion over the next 10 years. Repeal, it is therefore argued, would eliminate this possible savings, thereby adding to the deficit.
The problem is, it's not true. The so-called savings in the health-care bill are the product of "budget gimmicks, deceptive accounting, and implausible assumptions used to create the false impression of fiscal disciple," as former CBO director Douglas Holtz-Eakin, Joseph Antos, and James Capretta wrote in a January 19 column in the Wall Street Journal.
Indeed, among the 2,000-some pages of the health-care bill were a number of provisions that mask the true cost of the program.
For one, as Eakin, Antos, Capretta point out, the CBO only projected the cost of the law a decade in the future. That estimate was generated using 10 years of taxes to pay for six years of subsidies. While the taxes begin this year, the subsidies don't kick in until 2014. The actual 10-year cost of the bill's full implementation is actually about $2.3 trillion!
And then there's the so-called CLASS Act, a new, government-run, government-funded program for long-term care, intended to compete with long-term care plans provided by private insurers.
Participants would pay into the system for five years before they start collecting benefits. So, for at least the first five years, the program would generate a surplus. But eventually, the program will begin losing money, paying out more than it receives.
Third, the law makes cuts to Medicare's health-care providers. It's doubtful that cuts will ever happen, or that they should happen since they will jeopardize seniors' access to care. Congress will likely act to reverse the cuts, much like it reversed the looming 25 percent cut in Medicare reimbursement to physicians last year.
Fourth, Holtz-Eakin, Antos, and Capretta explain that CBO may very well be underestimating how many Americans will receive the subsidies made available by the new law. The bill assumes that only 19 million Americans (out of 111 million who could be eligible) would receive these subsidies. But, CBO assumes that many of the workers won't take the subsidies because they have employer-provided insurance. As the authors note, "the new subsidies are so generous that low- and moderate-income workers come out way ahead if they get paid in cash, not benefits, and move to the new entitlement." The cost of the entitlement program would then skyrocket.
Washington is often at its most creative when it comes to spending taxpayer dollars. Recall that the trillion-dollar stimulus proposal was needed to keep unemployment from rising above eight percent. And now, supporters of the trillion-dollar health-care bill say it can't be repealed because doing so would add to the deficit. To the contrary, keeping the law in place will bust the budget when the costly entitlement program turns to taxpayers for life-support in the years ahead.