Ten Miles Square


February 27, 2013 11:00 AM The True Cost of Obamacare

By Aaron Carroll

Time to “catch the vapors” again:

The Senate Budget Committee’s top Republican said a new government report shows that President Obama’s healthcare law will add $6.2 trillion to the deficit over the next 75 years.
Sen. Jeff Sessions (Ala.) said numbers from the nonpartisan Government Accountability Office (GAO) prove the Affordable Care Act won’t reduce the deficit, as proponents claimed.
“The report reveals the dramatic falsehoods that were used to push [the bill] to passage,” Sessions said in opening remarks at a Budget Committee hearing.

Philip Klein was kind enough to post a link to the actual GAO report (emphasis mine):

The effect of the Patient Protection and Affordable Care Act (PPACA), enacted in March 2010, on the long-term fiscal outlook depends largely on whether elements in PPACA designed to control cost growth are sustained. There was notable improvement in the longer-term outlook after the enactment of PPACA under GAO’s Fall 2010 Baseline Extended simulation, which assumes both the expansion of health care coverage and the full implementation and effectiveness of the cost-containment provisions over the entire 75-year simulation period. However, the federal budget remains on an unsustainable path. Further, questions about the implementation and sustainability of these provisions have been raised by the Centers for Medicare & Medicaid Services’ Office of the Actuary and others, due in part to challenges in sustaining increased health care productivity. The Fall 2010 Alternative simulation assumed cost containment mechanisms specified in PPACA were phased out over time while the additional costs associated with expanding federal health care coverage remained. Under these assumptions, the long-term outlook worsened slightly compared to the pre-PPACA January 2010 simulation.
Federal health care spending is expected to continue growing faster than the economy. In the near term, this is driven by increasing enrollment in federal health care programs due to the aging of the population and expanded eligibility. Over the longer term, excess cost growth (the extent to which growth of health care spending per capita exceeds growth of income per capita) is a key driver. Slowing the rate of health care cost growth would help put the budget on a more sustainable path. There is general agreement that technological advancement has been the key factor in health care cost growth in the past, along with the effects of expanding health insurance coverage and increasing income, but there is considerable uncertainty about the magnitude of the impact that the different factors will have on future health care cost growth.

Let’s be clear about what this report says. It’s a worst-case-scenario. They looked at what would happen to the deficit if (1) we left in all the spending, (2) all of the cost control measures utterly failed, and (3) we removed all of the revenue streams/taxes. If you do that, then the bill raises the deficit $6.2 trillion over 75 years.

But some of those things take an actual act of Congress. Many of the taxes and cost control measures will only go away if people like Sen. Sessions actually vote to strip them from the ACA. So I think it’s somewhat odd to say that the bill was passed with “dramatic falsehoods”. We won’t see these worrisome results because of the law. We’ll see them if Congress changes it.

Now if Sen. Sessions were to say that the GAO report shows we’re screwed if the government does everything in its power to avoid controlling costs, that’s something I’d agree with.

[Originally posted at The Incidental Economist]

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Aaron Carroll ,MD, is an associate professor of Pediatrics and the associate director of Children’s Health Services Research at Indiana University School of Medicine.


  • boatboy_srq on February 27, 2013 4:34 PM:

    Many of the taxes and cost control measures will only go away if people like Sen. Sessions actually vote to strip them from the ACA.

    This is how the GOTea gets away with the "tax-and-spend liberal" meme. They go along with the spending plan, and carefully remove any of the cost-saving components that are included, then cry foul when the final bill is higher than forecast. One look at the not-a-gift-to-Rolls-Royce second engine for the F-35 as a prime example: the Pentagon tried to cut costs by ending the program, and the GOTea promptly got behind RR's backup powerplant and whinged about how the DoD wasn't "supporting the troops" sufficiently - all the while complaining mightily about the overall budget deficit as if that second engine didn't contribute to the obligations.

    You can bet good money Sessions and the rest will actually vote to remove the cost control measures - along with family planning and other "offensive" provisions - on the basis of "interfering with business/choice/Freedumz™/GOTea-talking-point-du-jour and then whinge mightily about how them danged Librul Soshulist Democrats done drove us all to penury paying for them Special Privileges™.

    The modern GOTea isn't about controlling costs: it's about controlling where federal dollars are allocated (e.g. to their friends) and crying "we're broke" whenever those dollars get allocated anywhere else. This is why TARP was such a farce; why Medicare part D was written expressly forbidding the US from negotiating better drug prices; why financial industry reform was good but the CFPB wasn't - and certainly wasn't if a consumer advocate were selected to lead it; etc. Making a given program fail is insufficient: for the GOTea the only thing that will satisfy is funneling every budget dollar possible to their pet interests, whether directly through specific programs or indirectly through elimination of cost controls. These can be used either to bolster their support among industries increasingly dependent on federal dollars, or to cudgel the rest of us with the morningstar of perpetual indebtedness forced on The Taxpayer™ by those nasty, overspending, biased and special-interest coddling Dems.

    Sessions isn't discussing a hypothetical case where the ACA would be a burden if all the controls were removed; he's telegraphing that the GOTea is committed to removing all those controls, and painting the ACA as a bad idea because once the GOTea is done distributing the largesse the US will be in serious trouble trying to pay for it all.