House to Obama: Where did the additional $111 billion in ObamaCare costs come from?
posted at 1:20 pm on March 2, 2012 by Ed Morrissey
ObamaCare hasn’t even been implemented yet, and its subsidy costs have already risen 30% with no explanation. In the latest budget from the White House, the estimated cost for assistance to middle-class families in the insurance exchanges between 2014 and 2021 was $478 billion — an increase from last year’s budget of $367 billion. House Republicans want an explanation:
Cost estimates for a key part of President Obama’s health care overhaul law have ballooned by $111 billion from last year’s budget, and a senior Republican lawmaker on Friday demanded an explanation.
House Ways and Means Committee Chairman Dave Camp, R-Mich., wants to know by Monday why the estimated ten-year cost of helping millions of middle-class Americans buy health insurance has jumped by about 30 percent. …
At issue are subsidies that will be provided under the health care law to help middle class people buy private coverage in new state insurance markets that will open for business in 2014.
Last year’s budget estimated the cost of the aid to be $367 billion from 2014-2011. This year’s budget puts it at $478 billion over the same time period.
“This staggering increase … cannot be explained by legislative changes or new economic assumptions, and therefore must reflect substantial changes in underlying assumptions regarding the program’s … costs,” Camp wrote Friday in a letter to Sebelius and Treasury Secretary Tim Geithner.
The White House says there’s nothing to worry about:
Administration officials say the big increase from last year’s estimates is no cause for alarm and that the administration is not forecasting an erosion of employer coverage or higher insurance costs.
About two-thirds of the increase is due to effects of newly signed legislation that raises costs for one part of the health care law, but still saves the government money overall. The rest is due to technical changes in Treasury assumptions about such matters as the distribution of income in America.
What? So we’re going to save money by … spending a lot more of it? Well, that sounds a lot like the underlying basis for ObamaCare in the first place, but this is doubletalk. It’s reminiscent of the argument from the White House that contraception should be free because insurers (and therefore employers) save money in the long term, while ignoring the fact that up-front costs have to be covered on a year-by-year basis.
As far as “assumptions” go, it was those very assumptions that ObamaCare opponents challenged in 2009 and 2010. The Obama administration and Democrats in Congress projected lower costs in order to argue that the bill was revenue neutral in its first ten years, and collected taxes for three years ahead of these outlays in order to get the CBO to score it that way. Now we find out that the subsidies are 30% higher than those projections given to the CBO, and the White House tried to sneak it through Congress without admitting they got it wrong before the exchange subsidies even begin to roll out. Don’t bet that this $478 billion figure will be the final upward revision, either.
Update: Avik Roy reported on this for Forbes on Tuesday:
I’ve written extensively about how the most fiscally dangerous aspect of Obamacare is its creation of a new entitlement for subsidized private insurance, through the law’s state-based exchanges. If employers dump many of their workers onto the exchanges, as numerous independent analyses suggest is likely, taxpayers may need to spend as much as $200 billion a year extra on these exchange subsidies. Well, it turns out that the Obama Administration agrees that initial spending estimates are too low. The White House’s fiscal year 2013 budget adds $111 billion in exchange spending between 2014 and 2021, with even more spending to come in future years.
Nice work, so be sure to read it.