Liberal pundits might be pretending that Obamacare is irrelevant, or even a settled institution, now, but on the campaign trail, Democrats aren’t talking about it much, and some are even running away from the issue altogether. Considering the blotched rollout of HealthCare.gov back in October, the “keep your plan” fiasco, and the huge increases in health-care premiums, of course, this isn’t a shock. We’ve also learned that the president’s health-care law is probably depressing wages, that people may not be getting subsidies through the federal exchange, that the exchange still isn’t completed, that Obamacare may keep canceling your plans year after year, and that the law will hurt the labor market more than projected by CBO.
Now, you can add to the list the fact that Obamacare will worsen the deficit. My colleague Chuck Blahous has a piece over e21 on the issue where he details and explains the findings of a recent report from Republicans on the Senate Budget Committee. Blahous writes:
The report concluded that whereas earlier analyses appeared to find the ACA would reduce deficits, updated analysis employing Congressional Budget Office (CBO) methodology finds it is worsening deficits.
I am already on record as finding that the ACA worsens federal deficits, albeit for different reasons than the SBC study. My 2012 study showed that the ACA worsened budget deficits relative to prior law; CBO’s earlier projection of deficit reduction was instead in comparison with a baseline scenario it is required to use under congressional scorekeeping rules. Importantly, that baseline assumes substantial future spending increases will be enacted in any event. It’s only in comparison with this spending-increase baseline that the ACA appeared to reduce the deficit.
Unlike mine, SBC’s study compares the ACA only to the scorekeeping baseline imposed on CBO. In addition, the SBC analysis updates projections for recent CBO findings concerning the ACA’s costs and its effects on the labor market. I believe the SBC finding to be correct, as I will detail below. If so, this means the ACA worsens the deficit irrespective of whether you compare to prior law (as in my study) or the scorekeeping baseline (as in SBC’s).
Interestingly, one factor that makes the ACA a deficit-negative bill is thee fact that projections of health spending have continued to come down since 2012, meaning that cost savings due to ACA policies have come down, too. Of course, no matter what the Obama administration likes to say, the decline in health spending has nothing to do with Obamacare. Blahous has made that case over and over again, including here:
The second reason we can’t assign the ACA extra credit for the national health spending slowdown is that the evidence is mounting pretty conclusively that the ACA has little if anything to do with it. A striking graph (Figure 4-1) in the White House’s Economic Report of the President shows that the cost slowdown began well before the ACA was passed. Another compelling graph shows that the slowdown occurred throughout all OECD nations, and thus can’t be attributed to US legislation. Finally, the CMS Medicare actuary’s office has found that the ACA’s net effect so far has been to increase costs rather than decrease them.
And then there’s this:
Also, many of the ACA’s cost-savings provisions are not being enforced as originally assumed (bad). Examples include the ACA’s individual/employer mandate penalties, scheduled Medicare Advantage cuts that have been rolled back, and others. If this continues it will further worsen the ACA’s fiscal effects; the SBC analysis did not even take this into account.
The bottom line: Obamacare will worsen the deficit relative to what was claimed when the law was scored originally. If I were a Democrat, I wouldn’t be running on Obamacare either.