The Purpose of This Bl;og

By and large, liberals are very decent, kind, and compassionate people who genuinely want what is best. This should be kept in mind as we explore the Law of Unintended Negative Consequences near invariably resulting from Leftist big-hearted solutions to societal problems.

Wednesday, November 13, 2013

Obamacare - Won't Raise Deficits?

President Obama's web site claimed:
For decades, rising health care costs have hurt American competitiveness, forced too many families into bankruptcy to get their families the care they need and driven up our nation’s long-term deficits. That’s why, after years of inaction in Washington, President Obama took on the insurance companies to pass comprehensive health insurance reform. Health insurance reform ends the worst practices of insurance companies, which will reduce health care costs and make coverage more affordable for all Americans. And by curbing the cost of uncompensated care, and ending unwarranted subsidies, health reform reduces the deficit by over $1 trillion over the next two decades.
In keeping with the President’s pledge that reform must fix our health care system without adding to the deficit, the Affordable Care Act reduces the deficit, saving over $200 billion over 10 years and more than $1 trillion in the second decade. The law reduces health care costs by rewarding doctors, hospitals and other providers that deliver high quality care and making investments to fund research into what works. (See HERE)
Has the President kept his pledge?

Who can forget the uproar during the last couple of years over the fiscal cliff, sequestration, government shutdowns, raising debt ceilings, all with Obamacare standing front and center? (See HERE and HERE and HERE and HERE and HERE and HERE and HERE and HERE and HERE and HERE and HERE and HERE and HERE and HERE and HERE)

How could this be if Obamacare actually reduced the deficit by billions and trillions of dollars?

While people on the Left assert that the Obamacare/budget controversies were manufactured by people on the Right (see HERE and HERE and HERE), and doing away with Obamacare will allegedly increase the deficits (see HERE), a CNN article points out that
"When the Affordable Care Act passed in March 2010, the nonpartisan Congressional Budget Office estimated that it would reduce deficits by more than $100 billion in the first decade, and by considerably more in the second decade -- by half a percent of economic growth. A half percent of GDP over a decade could mean reducing deficits by more than $1 trillion.

So, what's the problem? The CBO's estimate assumes that the law would be adhered to exactly as written.
Except that almost never happens with big legislation.

The CBO itself noted that the ACA would "put into effect a number of policies that might be difficult to sustain over a long period of time."

A number of changes have already been made, and more are being proposed -- some of which could diminish the law's deficit-reduction potential....

The Government Accountability Office did a long-range simulation that included these and other assumptions about the broader budget.

In such a scenario, the GAO found that deficits would go up 0.7% of GDP over the next 75 years. That would be due in large part to increased spending on Medicaid, the Children's Health Insurance Program and subsidies offered on the health insurance exchanges." (See HERE)
The article then attempts to blunt the bad news by claiming that, "Already, growth in national health spending -- of which federal spending is a big part -- has fallen to a record low rate" (ibid)

However, as indicated in my previous article, this statistic is misleading in several respect. (See HERE) The truth is, health care cost are still rising and projected to continue to increase, which means that health care cost to the government, and thus deficits, will continue to rise as well. (See HERE and HERE and HERE and HERE and HERE and HERE and HERE and HERE)

The WSJ acknowledged: "It's true that the Congressional Budget Office estimates that the Senate version of ObamaCare would reduce the deficit by $118 billion over 10 years. But even that number was concocted by budget gimmicks, such as using 10 years of new taxes to fund six years of benefits, as Wisconsin Republican Paul Ryan showed at the White House health summit. Mr. Orszag says this doesn't matter because CBO says the bill will save some $1 trillion in the second decade too. In fact, CBO is careful to stress that it doesn't really know "because the uncertainties involved are simply too great" over such a long time period. CBO also says that the new entitlement will grow by 8% a year, even as Medicare and Medicaid grow by similar magnitudes and overall federal spending is already at 25% of GDP. If this new entitlement actually "saves" money, it will be the first in history." (See HERE)

According to the Heritage Foundation: "Obamacare will spend $1.7 trillion (over 10 years) on its coverage expansion provisions alone, including a massive expansion of Medicaid and federal subsidies for the new health insurance exchanges. Obamacare will increase federal health spending by 15 percent, bringing it to 44 percent of all mandatory spending. Obamacare’s 18 new or increased taxes and penalties raise $836 billion in new taxes between 2013 and 2022 Obamacare also includes $716 billion in spending cuts to Medicare, which are used to help offset new spending on non-Medicare provisions.The Medicare chief actuary warns that these cuts are unrealistic and unsustainable. Therefore, Obamacare will likely add billions to the budget deficit. Under Obamacare, all government health spending (including state and local) is projected to be nearly 50 percent of all health spending by 2021. Federal spending will account for two-thirds of total government health care spending." (See HERE)

Besides, one need but consider the botched roll-out of the Obamacare web site, and the so-called "fix,"  to find ample evidence that Obamacare isn't progressing as planned. (See HERE and HERE and HERE and HERE and HERE and HERE and HERE and HERE)

Worse yet, once people are able to access the web site, and reports start coming in, we may all better see how little Obamacare resembles it's glittering packaging. What, with all the repelling sticker shock on the one hand (particularly among the young and health upon whose shoulders the burden of Obamacare rests), and the flight to Medicaid, serious doubts may be raised regarding projected revenues and outlays.

The Leftist LUNC here, then, is not only has and will Obamacare raise deficits contrary to what was pledge, but with the way things are going, it will be far worse than what was expected.

[Update: 10/14/2014, Obamacare is projected to ruyn deficits of $131 billion from 2015 - 2024--see HERE)

[Update 06/22/2015: CBO report suggests that repeal of Obamacare would increase the deficit between $137 billion and $353 billion over 10 years--see HERE)

For an explanation as to why these Leftist LUNCs occur, please see: Gov: Wrong Tool for the Right Job - Introduction and Cold Nanny as well as The Politics of Compassion, Emotions, Ignorance, Denial, Blame-Shifting, and Victimization

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