CBO: Obamacare repeal would be costly
Congressional report projects big increases in defiit and uninsured from repeal of the Affordable Care Act
MY FAVORED DEFINITION of “health policy wonk” is someone who reads health reports from the Congressional Budget Office — and enjoys it. Guilty as charged. Last Friday’s new report, “Budgetary and Economic Effects of Repealing the Affordable Care Act,” was enlightening and fascinating. It will be a benchmark document during the coming two years of debates over the ACA’s future — and required reading for my students this fall. Lucky them!
This report is already a fountain of numbers thrown around by both parties — and it reflects the changing politics at CBO under Republican control of the US House of Representatives and the Senate. What are the key numbers?
- Repeal on 1/1/2016 would increase the federal deficit by $353 billion between 2016-2025, or by $137 billion using the CBO’s new “voodoo” macroeconomic analysis;
- Repeal would cause “federal budget deficits to increase by growing amounts after 2025, whether or not the budgetary effects of macroeconomic feedback are included.”
- Repeal would increase the number of uninsured Americans by 19 million in 2016 and by 24 million in 2020;
- Repeal would increase the US gross domestic product (GDP) by 0.7 percent between 2021-25, with “substantial uncertainty” regarding this estimate in both directions.
So there you have it. Repealing the ACA, the premiere policy goal of just about every Republican House and Senate member, will dramatically increase both federal deficits and the numbers of uninsured Americans in a report signed, sealed, and delivered to Capitol Hill by Republicans’ newly appointed CBO director, Keith Hall. Hall replaced the prior highly respected CBO director, Doug Elmendorf (who was just appointed the new dean of the Kennedy School of Government at Harvard, beginning next January).
In a desperate attempt to find a silver lining, Republicans proclaim that ACA repeal will spur economic growth “because provisions of the law that are expected to reduce the supply of labor would be repealed.” What does this mean? In prior reports, CBO estimated that about 2 million Americans would stop working because the ACA allows them to obtain health insurance outside employment. Mostly, this involves older workers nearing age 65 hanging onto unsatisfactory jobs to qualify for employer health insurance. Repealing the ACA would compel many of them back to work for health insurance.
Throughout the new report, frequent cautions are issued: “The estimates of the macroeconomic effects and of their consequences for the federal budget are highly uncertain, however, and actual results could be substantially different.” Amen.
Elsewhere, many detailed estimates are informative and untainted by DS. For example, to pay for a large part of the ACA’s cost, the law reduced Medicare payments to hospitals, insurance companies and other medical providers. In 2010, the 10-year revenue estimate from the cuts was $450 billion between 2010-2019. But the reductions didn’t take effect until 2012 and beyond, so the new $879 billion estimate, 2016-2025, represents the fully loaded impact. Repealing the ACA would restore these reductions, hiking Medicare’s 10-year cost by that amount.
But here the new CBO report gets hinky:
“…For this analysis, CBO assumed that repealing the [Medicare] provisions that reduced payment updates in the fee-for-service sector would increase the payment updates in 2016 and beyond — but it also assumed that HHS [US Department of Health & Human Services] would not adjust the current payment amounts to remove the effects of past update reductions implemented under the ACA. If instead HHS also adjusted those base payment amounts upward for the purpose of determining future payments, the cost of repealing the ACA’s provisions would be roughly $160 billion higher over the 2016-2025 period than is estimated above.” (p.12)
So, depending on how one counts the Medicare payment reductions, the actual 10-year deficit impact of ACA repeal may be not $137 to $353 billion but $297 to $513 billion. It depends on how you count.To me, here’s the number that matters most: 24 million more uninsured Americans by 2020 if Republicans get their way. I recall relentless charges of “rationing” thrown at Democrats throughout the ACA legislative process, and since. How is advocating ACA repeal and offering nothing of substance to replace not rationing?
Thanks to CBO for setting the stage for what comes next.