CBO Shell Game On Repeal Of Obamacare
Before everyone starts hyperventilating and buying into the narrative being pushed wholesale by aggressively liberal Democrats and their cohorts in the mainstream media that efforts to repeal Obamacare will skyrocket the national deficit, let’s take a deep breath of sanity and consider the source: a horribly flawed Congressional Budget Office scoring of the healthcare legislation, rife with accounting gimmicks and budgetary illusions.
House Budget Chairman Paul Ryan (R-Wisc.) lays out the more egregious flaws here:
Misleading claims on its deficit impact exclude the $115 billion needed to implement the law and over $500 billion in double-counting Social Security payroll taxes, CLASS Act premiums, and Medicare reductions. The law was written to measure 10 years of tax increases to offset 6 years of new spending. The Democrats stripped costly provisions that were included in initial score, and enacted them separately to add hundreds of billions of dollars to the deficit. Hiding spending does not reduce spending. There is no question that the creation of a trillion dollar open-ended entitlement is a fiscal train wreck.
Still not convinced? Check out the full report that defends Obamacare repeal, issued by the office of new House Speaker John Boehner. Some key excerpts (a little long reading, but worth the time):
Claims that the health care law would lower the deficit were based primarily on an analysis by the non-partisan Congressional Budget Office (CBO) showing costs of $940 billion over ten years and deficit reduction of $143 billion over the same period.
An analysis by House Budget Committee Republicans, however, reveals the true cost of the health care law – if fully implemented – to be $2.6 trillion.
(The analysis) demonstrates how the law’s authors used CBO’s methodology to their advantage. CBO evaluates legislation over a ten-year budget window. The health care law’s most significant benefits don’t take effect for four years, however, meaning that the law requires ten years of tax increases and ten years of Medicare cuts to pay for six years of spending. Budget Committee Republicans’ analysis also uncovered that the health care law will actually increase the deficit by $701 billion over the next ten years.
This figure is reached after balancing the CBO savings figure against a number of accounting gimmicks that were ineligible for inclusion in CBO’s original analysis:
* $53 billion of savings is claimed by counting increased Social Security payroll revenues. These dollars, however, are already spoken for by Social Security beneficiaries, meaning either that benefits will not be paid out, or the law’s authors are double-counting the savings.
* $70 billion of savings is claimed from the newly created Community Living Assistance Services and Support (CLASS) program. These savings are achieved by collecting premiums immediately and beginning to pay out benefits after five years, hence why savings appears in the ten-year budget window. Over time, however, as CBO has found, this new entitlement “would eventually lead to net outlays when benefits exceed premiums.” The Washington Post has said of the CLASS program: “These are not ‘savings’ that can be honestly counted on the balance sheet of reform.” Senate Budget Chairman Kent Conrad (D-ND) has called CLASS “a Ponzi scheme of the first order.”
* $115 billion in new government spending required to implement the health care law is not factored into CBO’s initial estimate. On May 11, CBO notified Congress that additional discretionary spending would be required to implement the government takeover of health care. This includes roughly $9 billion for both the Internal Revenue Service (IRS) and the Department of Health and Human Services (HHS)
* $398 billion is claimed in Medicare Hospital Insurance Fund savings. CBO has previously noted that “to describe the full amount of HI trust fund savings as both improving the government’s ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings and thus overstate the improvement in the government’s fiscal position.”
The CBO estimate also does not account for the cost of the scheduled cut in Medicare payments to physicians (the ‘doc fix.’)
There are additional provisions in the law that present the possibility of cost overruns. Section 1101 provides for the establishment of a “temporary high-risk insurance health insurance program” to benefit patients with pre-existing conditions. Under the law, Congress allotted $5 billion to get the program up and running, a sum that evidence shows may be insufficient.
Two months prior to final passage, Medicare’s chief actuary, Richard S. Foster, determined that the $5 billion sum would be “exhausted” within two years of the program’s implementation, resulting in “substantial premium increases” that would “limit further participation.”
….
In a separate analysis, CBO director Douglas Holtz-Eakin found that the health care law “will raise the deficit by more than $500 billion during the first ten years and by nearly $1.5 trillion in the following decade.” He concludes: “In light of the precarious state of federal fiscal affairs and the enormous downside risks presented by the act, one can only hope that every future effort is devoted to reducing its budgetary footprint.”
In May 2010, CBO director Douglas Elmendorf gave a presentation to the Institute of Medicine in which he defended his office’s initial finding that the health care law would lower the deficit over ten years. At the same time, he provided a more complete picture of the health care law’s impact on the budget, concluding that the law does little to reduce the pressure rising health care costs are placing on the federal budget deficit.
In April 2010, Medicare’s Office of the Actuary released an analysis showing that the new law would increase national health care spending by more than $311 billion over the next ten years. Specifically, chief actuary Richard Foster’s report concluded that:
* The law’s new taxes would lead to higher premiums for patients.
* The CLASS program, one of the law’s cost-savers, carries “a very serious risk” of insolvency.
* Roughly 15 percent of hospitals and providers would go into the red, “possibly jeopardizing access” for seniors.
Foster reserved his “most sober assessments” for Medicare. Foster found the law’s Medicare cuts to be unsustainable, their long-term viability “doubtful.” Foster echoed the CBO’s finding that savings from the program cannot be double-counted.
The full report also details the job-killing and tax implications of Obamacare, something liberals and the mainstream media conveniently omit from their defense of so-called healthcare reform.
It’s past time to have a full and honest discussion on healthcare reform; maybe with the new balance of Congress, that’ll happen – because it sure didn’t last time around.
We need your help! If you like PunditHouse, please consider donating to us. Even $5 a month can make a difference!
Short URL: https://pundithouse.com/?p=4677
