The Challenge


CBO analysis has a very poor history, especially in predicting the costs of healthcare.  No sooner had ObamaCare passed then the estimates went up.   The original cost of Medicare was a small fraction of what it quickly became just a few years after being passed.

And the politicians analyzing the cost savings of ObamaCare have an even worse record.

The video at right is an assessment by Sally Pipes, a well published and insightful policy expert on healthcare.


In addition, the response to criticism of the CBO on the cost analysis, is simple: just declare any criticism of ObamaCare as unfounded. 


The declarations by the supporters of ObamaCare are quite pronounced and coming from an elitist viewpoint that they know best, and there is none better than Paul Krugman:

Krugman, Others Slam Newsweek's Ferguson

“Readers are no doubt meant to interpret this as saying that CBO found that the Act will increase the deficit. But anyone who actually read, or even skimmed, the CBO report knows that it found that the ACA would reduce, not increase, the deficit — because the insurance subsidies were fully paid for,” Krugman wrote.



 Betsy McCaughey writes in "ObamaCare's Phony Deficit Reduction"   Link

Defenders of President Obama's health law are flaunting a Congressional Budget Office claim that overturning the law would worsen the federal deficit. Repeal, said a CBO report late last month, would cancel $890 billion in new entitlement spending but eliminate revenues of even greater magnitude.


Don't be bamboozled. Even if it were true that ObamaCare raises more money than it spends, that would hardly be reason to keep it, or any law.


ObamaCare creates two costly giveaways—an expansion of Medicaid and new subsidies for people purchasing private insurance. It "pays" for both new entitlements by hiking taxes and penalties, and by raiding funds previously designated for Medicare.


The half-trillion dollars in tax hikes and half-trillion dollars in cuts to Medicare funding together total more than the cost of the new entitlements during the next 10 years, according to the CBO, and produce a small $109 billion surplus. Repealing ObamaCare would erase that tiny surplus.


So what? Repeal also would reduce government spending, lower taxes, and undo the evisceration of Medicare: all good results.


Nevertheless, Senate Majority Leader Harry Reid declared that the CBO "confirms what we've been saying all along: the Affordable Care Act saves lots of money." Untrue.


Recently published projections from the Centers for Medicare and Medicaid Services (CMS) show that cumulative health spending over the next decade will be $478 billion higher than if the law had not been passed. Health-care spending as a share of gross domestic product will rise to 19.6% in 2021 from 17.9% in 2010, and government (i.e., taxpayers) will be paying for a larger share of it than ever before.


House Democratic Whip Steny Hoyer boasted that the CBO report "makes it very clear: the Affordable Care Act is controlling the growth of health-care costs."  Also untrue.


Health-care spending was growing at the slowest rate in many decades when ObamaCare was passed, inching up only 3.9% in 2009 and again in 2010. But CMS predicts spending will shoot up 7.4% in 2014, when the health law goes into full effect.


Moreover, private insurance premiums will increase 7.1% that year, says CMS, which is more than double the increase if the law had not been passed.


The only area of health-care spending that will grow slowly as a result of the law is Medicare, due to ObamaCare cuts and further cuts under the Budget Control Act of 2011. Richard Foster, chief actuary of CMS, warned Congress in April 2010 that the ObamaCare reductions in payments to hospitals are so severe that some hospitals may have to stop accepting Medicare. Where will seniors go?


Finally, ObamaCare's so-called Cadillac tax—a whopping 40% tax on health plans valued at more than $27,500 for a family of four—may never be collected. This tax is the second-largest projected revenue generator ($111 billion by 2022) after the penalties on employers who don't offer the government-mandated health plan ($117 billion). But powerful unions pushed Congress to both delay the tax to 2018 and to exempt union workers in "high risk" occupations, including construction workers and longshoremen.


It's hard to imagine that a future president and Congress would have more fortitude to impose this tax than the health law's namesake. Yet delaying the tax even four additional years, according to CBO figures, would entirely wipe out the "surplus" the Democrats are bragging about.


The CBO's claim that repeal of ObamaCare would increase the deficit will be reiterated many times in the next few months to discredit presidential candidate Mitt Romney's promise to repeal the law. Don't be misled by the CBO's fuzzy math and Washington's infatuation with deficit reduction.


Deficit reduction is code for increasing taxes faster than spending.  What the nation needs is entitlement reform to reduce spending, and the best way to start is by repealing the two new entitlements in the Obama health law before they go into effect.


Ms. McCaughey, author of "The Obama Health Law: What It Says and How to Overturn It" (Encounter, 2010), is a former lieutenant governor of New York.




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