Topics: Obamacare

Examiner Editorial: CBO gives up on projecting long-term costs of Obamacare

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One of the great subjects of debate during the fight over President Obama's health care law concerned the effect that the legislation would have on long-term deficits. When it became law, the Congressional Budget Office projected Obamacare would reduce deficits, but critics, pointing to multiple accounting gimmicks Democrats used to game the CBO score, questioned whether the projection would prove accurate. Now, Americans may never get an answer - at least from the CBO. More than four years after Obamacare passed, the CBO is now saying it is “not possible” to do another complete analysis on the effect of the law on the nation's deficits.

It's worth clarifying the distinction between costs and deficits. On the one hand, Obamacare costs a lot of money - mostly due to the expansion of Medicaid and the provision of subsidies for individuals to purchase coverage through government-run insurance exchanges. At the time of passage, the CBO projected that the gross cost of expanding insurance through Obamacare would be $938 billion over a decade - but this vastly underestimated the actual cost of the program.

The reason is that the original CBO score was for the 2010 through 2019 budget window. Because the major spending provisions – Medicaid and exchange subsidies – didn’t kick in until 2014, the first 10-year score only included six years of real spending. In the most recent estimate in April, the CBO revealed that the cost over the new 2015 to 2024 budget window would be more than $1.8 trillion, or roughly double the first projection.

Though the law increases health care costs by trillions, it also includes tax increases and cuts to projected Medicare spending aimed at offsetting those costs. At the time of passage, the CBO concluded that once everything was factored in, the law would reduce deficits by $143 billion over the first decade. In July 2012, an updated forecast shrunk that estimate to $109 billion. The CBO has not done a complete deficit forecast since that July 2012 report, though it has continued to provide updates to the spending forecast.

In its April update, however, the CBO included a footnote, highlighted recently by Roll Call, noting that, “CBO and (the Joint Committee on Taxation) can no longer determine exactly how the provisions of the (Affordable Care Act) that are not related to the expansion of health insurance coverage have affected their projections of direct spending and revenues… Isolating the incremental effects of those provisions on previously existing programs and revenues four years after enactment of the ACA is not possible.”

Obamacare critics - as well as actuaries at the Centers for Medicare and Medicaid Services - have questioned whether the proposed Medicare cuts will actually remain in effect as the law projected. The actuaries also wonder if unions, medical device companies, insurers, and drug makers will succeed in undoing any of the tax provisions that affect them. Undoing these provisions would unravel the deficit reduction claims of Obamacare. Regardless, Americans can no longer count on a revised ruling from Congress's official scorekeeper on Obamacare's true costs to taxpayers.

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