The Net Costs of “ObamaCare”


Thursday March 15th, 2012   •   Posted by Craig Eyermann at 9:44am PDT   •  

Health Care

Source: attorneygeneral.utah.gov

How much will the Patient Protection and Affordable Care Act (a.k.a. “ObamaCare”) really cost over a 10 year long period?

According to the Congressional Budget Office, far more than the Obama administration has previously been willing to acknowledge. The Washington Examiner’s Philip Klein reports:

President Obama’s national health care law will cost $1.76 trillion over a decade, according to a new projection released today by the Congressional Budget Office, rather than the $940 billion forecast when it was signed into law.

We thought it might be interesting to put those values into the context of the best possible scenario of the annual U.S. government budget deficit for the years from 2012 through 2022, as represented by the Congressional Budget Office’s most recent extended baseline budget scenario.

(Note: What makes the CBO’s extended baseline budget scenario so optimistic is that is assumes that today’s politicians will follow current law to the letter and not act to prevent a number of popular tax cuts and massive spending cuts from happening and that other likely spending increases will not occur.)

Our results are graphically presented below:

'Best Case' Budget Scenario for 'ObamaCare', 2012-2022

In our chart, what find is that under this most optimistic scenario for federal tax collections and spending, the dominant driver of the budget deficit will be President Obama’s health care law, which would grow beginning in 2013 to account for anywhere from 50 to 72% of the budget deficit, and the corresponding increase in the U.S. national debt, in any given year.

That’s the optimistic view. The Atlanta Journal and Constitution’s Kyle Wingfield explains why the critics of Obamacare were right to point out the President’s flawed estimates for the cost of the program:

The only way in which Obamacare critics were wrong in our protests that the law would cost far more than advertised was that we underestimated the damage, by about $40 billion from 2014-2023 if the cost figure continues to grow at the minimum 6 percent annually CBO is now using. That would make it $2.04 trillion during those 10 years.

This is in part because, as Obamacare opponents explained at length at the time, congressional Democrats had rigged the score by beginning the tax increases before the spending kicked in. That made the 10-year figures both for the gross cost and the deficit “savings” look better than they would have if we considered 10 years of Obamacare fully implemented.

But it’s also because, as I’ve explained here recently, the estimates were faulty. Take three years in which there’s an overlap between the two estimates: 2017-2019. The new estimate for the total costs during that time span is now $147 billion, or 30 percent, higher than the original estimate just two years ago. The new estimate for “savings” has fallen by $314 billion, or 63 percent.

The result is that the effect on the federal budget from 2017-2019 has gone from a projected “savings” of $8 billion to an increased deficit of $453 billion.

And it’s only going to get worse in future years, if the new projections hold. That’s because they see the revenue portions holding steady while the expenses keep going up, up, up.

Oh — and this fiscal worsening is taking place while the projected increase in the number of people who are insured by 2019 thanks to Obamacare has fallen by 1 million.

If you’ve had any illusions that the spending needed to support “ObamaCare” was sustainable, the direct role of that spending program will have in jacking up the national debt throughout its miserable existence will hopefully help dispel them.

Data Sources

Congressional Budget Office. The Budget and Economic Outlook: Fiscal Years 2012 to 2022. [PDF document]. January 2012. Accessed 14 March 2012.

Congressional Budget Office. Updated Estimates for the Insurance Coverage Provisions of the Affordable Care Act. [PDF document]. March 2012. Accessed 14 March 2012.




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