Of course: Budget deal repeals funding mechanisms for "deficit neutral" ObamaCare

Remember all of the taxes Democrats added to ObamaCare as a means to project it as deficit neutral in its first ten years? That strategy allowed Harry Reid to pass it without risking a filibuster under reconciliation rules, but that was then and this is now. To get an agreement on the FY2020 budget, Democrats axed the three health-care taxes that got them Barack Obama’s biggest legislative win almost ten years ago:


The roster of add-ons grew over the weekend to include permanent repeal of a tax on high-cost “Cadillac” health insurance benefits and finance health care and pension benefits for 92,000 retired union coal miners threatened by the insolvency of their pension fund. A tax on medical devices and health insurance plans would also be repealed permanently.

At least it got them through the first decade of ObamaCare, right? Er … not really, no:

The deficit tab for the package grew as well — about $500 billion alone over 10 years to repeal the three so-called “Obamacare” taxes alone — with a companion package to extend several business-friendly tax breaks still under negotiation. The Obama-era taxes have previously been suspended on a piecemeal basis.

The late-stage negotiations involved House Speaker Nancy Pelosi, D-Calif., Treasury Secretary Steven Mnuchin, and other top leaders on Capitol Hill. The package is expected to be unveiled at midday Monday for a House vote on Tuesday and the Senate is expected to vote by Thursday or Friday.

Politico notes the budgetary impact on Obama’s signature legislation:

The medical device tax and health insurance tax have been intermittently implemented, while Congress preserved a moratorium on the “Cadillac” tax until 2022. The House voted overwhelmingly over the summer to drop it completely, and last week, Senate Minority Leader Chuck Schumer first pushed for a full repeal as part of the spending deal.

The move all but guts the funding provisions for the Affordable Care Act, with the Cadillac tax repeal alone projected to cost nearly $200 billion. An outdated 2015 estimate from the Congressional Budget Office said a medical device tax repeal would cost about $24 billion over a decade, while the IRS estimated earlier this year that a repeal of the health insurance tax would amount to $15.5 billion just in 2020.


This mattered greatly ten years ago, but … only procedurally. At the time, Republicans took great pains to argue — presciently — that these taxes wouldn’t generate the revenue projected by Democrats to get to deficit neutrality. Some also predicted that the political impact of these taxes would ensure that they wouldn’t survive for long. Both prophecies turned out to be true, but that only matters if anyone takes deficits and debt seriously.

The fact that this budget doesn’t make spending cuts to deal with the projected revenue losses demonstrates the lack of seriousness by both parties on debt. In fact, the budget has some additional health-care spending … on studies of gun violence, no less:

The deal would provide federal funding for gun violence research for the first time in over 20 years, marking a majority victory for Democrats and gun control groups that have long lobbied Capitol Hill on the issue. It would designate $25 million for research at the Centers for Disease Control and Prevention and the National Institutes of Health to study gun violence — a field that has largely been stymied since the 1990s, when Congress began using spending bills to bar taxpayer funding for such work.

That’s not going to make the NRA happy, but it’s not an existential crisis, either for the NRA or a trillion-dollar-plus deficit.


It is, however, a good object lesson about massive entitlement programs and the fundamentally dishonest manner in which they usually get pushed. On its own, this is just a footnote to ObamaCare. In today’s politics, however, it is a bright warning flare to treat with extreme skepticism any claims from Democratic presidential candidates about their own plans for a new overhaul of the American health-care system. Fool me once, shame on you ….

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John Stossel 5:30 PM | July 13, 2024