Real bite from ObamaCare in Decade 1: $820 billion

The White House has tried to hit back against the CBO for scoring its health-care proposal in the House as a $239 billion bomb to the federal deficit over the next ten years.  The administration got some help from an unlikely source, who also challenges the total.  Chuck Blahous, a Bush-era economic adviser, writes today that people got the CBO report wrong — and that the total hit will be more than three times what the CBO projected:

Nearly lost in all of the publicity about the Congressional Budget Office’s finding that proposed health care legislation would worsen the current-law deficit by $239 billion over the next 10 years is something far more troubling: The proposed legislation would actually worsen the imbalance in federal health care programs by more than $800 billion over the next 10 years — and far more thereafter.

CBO’s analysis shows quite clearly that the proposed changes to federal health care commitments would worsen the deficit by $1.042 trillion, with proposed health care savings netting only $219 billion. The net effect of these health care “reforms,” therefore, is to dig the financial hole in federal health care programs deeper — not by $239 billion but by $820 billion over the next decade.

Worse yet, by the 10th year of the analysis, the additional annual costs of the proposed health care changes would be more than four times the expected savings — worsening the imbalance by more than $150 billion in the 10th year alone. Thus, the more than $800 billion gap would only grow larger over time, with no end in sight. …

The oft-cited finding that these bills as a whole would add “only” $239 billion to the deficit over 10 years is based on the Joint Committee on Taxation’s accompanying analysis of provisions to increase unrelated income taxes by $581 billion during the same time period.

Whatever the merit of these other income tax increases, they have nothing to do with health care reform or with “bending the cost curve.” They are, rather, being proposed to offset part of the true $820 billion deficit impact of proposed federal health care expansion.

The difference between the two numbers is not the fault of the CBO.  They provided scoring for the entire package, and the mix of revenues and spending calculate to a $239 billion deficit in the first decade.  Ten years later, it comes to a $205 billion deficit in one year alone.  But as Blahous points out, that also comes from tax increases that take $87 billion a year out of the economy and into the hands of bureaucrats, a curve that amounts to almost $600 billion in confiscations in Decade One, and even more in Decade Two — at least according to the flawed static tax analyses used by everyone in the Beltway.

When we talk about the overall bite that this bill takes, we should put it in Blahous’ terms: $820,000,000,000 between 2013-2019 — which won’t even pay for the program.

Update: I adjusted the first paragraph to more accurately reflect Blahous’ argument that people missed a key part of the report, not that CBO scored the bill incorrectly.

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David Strom 5:21 PM on March 31, 2023