A new report from the Congressional Budget Office provides us with fresh insight into how much worse President Obama’s national health care law made our nation’s spending crisis.
When Democrats were reverse-engineering the health care law to meet Obama’s pledge that it would cost “around $900 billion,” one of the accounting tricks they used was to delay the enactment of the major spending provisions until 2014, to make the legislation appear cheaper over the CBO’s 10-year budget window (which at the time ran from 2010 through 2019). Today, the CBO released its updated budget and economic outlook that includes three additional years. Though the report doesn’t isolate the cost of Obamacare, it contains countless examples of how the law will put pressure on the budget.
As demonstrated by this chart, overall, spending on federal health care programs will more than double, from $847 billion, or 5.5 percent of GDP, in 2012, to $1.8 trillion, or 7.3 percent of GDP, by 2022. Notice the spike starting in 2014, when Obamacare’s major spending provisions are scheduled to take effect.
It’s true that a combination of health care inflation and the retirement of baby boomers would have driven up spending over the next decade no matter what. But Obamacare (formally known as the Patient Protection and Affordable Care Act) still made things worse.
Some highlights from the CBO:
-- Obamacare’s expansion of Medicaid eligibility will make the program far more costly: “Spending for the program will climb again in 2013 and will shoot up rapidly in 2014, 2015, and 2016 as a result of provisions in the Affordable Care Act. By 2022, under current law, federal outlays for Medicaid are expected to total $605 billion, more than twice the 2012 amount; spending will equal about 2.5 percent of GDP, compared with 1.7 percent this year.”
-- Obamacare’s insurance exchanges and additional provisions will drive up the costs of other health care programs: “In addition to Medicare and Medicaid, the federal government operates other programs through which it subsidizes the provision of health care…Provisions in the Affordable Care Act will significantly increase the scope and scale of such benefits in the coming decade. In CBO’s baseline projections, federal spending for mandatory health care programs other than Medicare and Medicaid rises from $26 billion this year to $161 billion in 2022.” In the decade from 2013 to 2022, the cost of the exchanges alone will total $645 billion.
-- Obamacare will help make the Medicare prescription drug benefit more expensive: “(F)ederal spending per beneficiary for Part D will double, largely because of a combination of rising drug costs and the more generous benefits enacted in the Affordable Care Act.”
-- The CLASS Act, which was responsible for half of the deficit reduction in Obamacare at the time of passage, will no longer produce revenue because it was suspended: “In its August 2011 baseline projections, the agency anticipated that the CLASS program would begin collecting premiums in fiscal year 2012 and that net receipts from the program between 2012 and 2021 would total $76 billion. In the absence of that program, the government will not receive that income.”
Defenders of Obamacare’s finances will argue that the legislation ends up reducing the deficit due to a combination of Medicare cuts and tax increases Yet as I noted last week, even if those policies go into effect as planned, nearly all the money raised will be used to pay for the new Obamacare entitlements rather than deficit reduction. Today’s CBO report reinforces the fact that Obamacare dramatically drives up spending and adds to our long-term debt obligations.