Would Repealing ObamaCare Break the Budget

Wednesday, January 12, AD 2011

One of the priorities of the new Republican majority in the House is to repeal ObamaCare — though this would in effect be a purely sympolic move since a repeal would have no chance of passing the Senate, much less surviving an Obama veto. Nonetheless, pundits are having their say over the matter, and one of the odder arguments being advanced is that repealing ObamaCare would result in increasing the budget deficit. This has allowed Democrats to accuse Republicans of not only wanting sick people to go without treatment, but of wanting to spend more money than it would cost to insure them. How exactly does this math work?

As Ruth Marcus points out in the Washington Post, there’s a lot of funny math going into the CBO projection that repealing ObamaCare would increase the deficit.

The Congressional Budget Office projects that the health care law, if implemented as promised, would save $230 billion over the next decade. There are two important words in that sentence: projects and if.

Of all the cost estimates that the CBO produces, the most complex and least reliable involve health care. This is in no way a criticism of CBO. No matter how sophisticated the economic model, the multi-layered assumptions about the future cost of health spending make the $230 billion projection closer to an educated guess (albeit a guess made by very educated economists) than a take-it-to-the-bank certainty.

And even if the CBO forecasts were guaranteed to come true, there is the political calculus to consider. CBO made this point in its usual, restrained way Thursday, noting that “current law now includes a number of policies that might be difficult to sustain over a long period of time. If those policies or other key aspects of the original legislation would have been subsequently modified or implemented incompletely, then the budgetary effects of repealing [the health-care law]…could be quite different.”

Translated into English: don’t bet on that $230 billion. The health-care law will require billions in new spending. It relies on the expectation of billions in savings from slowing the growth of health-care costs and assorted cuts and taxes — all guaranteed to produce howls of outrage, and a burst of lobbying, from the affected interests. Health-care reform, done right and with steadfastness that is not always forthcoming from the legislative branch, could be a huge contributor to reducing the deficit.

The conceit that repealing ObamaCare would actually cost money is rather like someone on the verge of bankruptcy, who has put together a plan in which he can buy a brand new Land Cruiser if only he cuts his utility usage by 50%, drops his cell phone plan, and feeds his family on $50 per week, and thus coming out ahead $25 per month even with the Land Cruiser payment, telling himself that backing out of the car purchase would be a bad idea because, if adhered to, his plan for affording it would make him better off.

Supporters of ObamaCare can certainly argue that their legislation is worth the expense — or they can simply comfort themselves that having rammed the whole messy thing through without having read it very carefully, they have at least two years to allow it to start to implement before the GOP could possibly have the ability to formally repeal it (attempts to simply refuse to fund it would be more successful) — but claiming that it is a true savings is a high flown exercise in kidding oneself.

The numbers may add up well enough to convince the wonks, but the average voter does not in fact add very well and so relies on his or her basic understanding that if you institute a big new program, it will cost a lot of money. In this case, the odds are strong in favor of the common sense approach being a more accurate assessment in the long term than the fancy spreadsheets. If they don’t make mortgage derivatives profitable, it probably won’t make large new health care programs a savings either.

3 Responses to Would Repealing ObamaCare Break the Budget

  • The repeal bill should keep the cuts in place.

  • Repeal is also about reducing government control over our individual persons and finances.

    I read about a report that pegged repeal SAVINGS at $540 billion. Figures don’t lie, but liars figure.

    “Educated economists”???? More like comprehesively ignorant, clueless professors out of touch with reality and infallibly ignorant of how things work in the real world.

    Of course, paying for health care for 30,000,000 documented and undocumented dem voters will cost we the taxpayer a ton . . .

  • http://online.wsj.com/article/SB10001424052748704415104576065723458609678.html?KEYWORDS=cbo+health+care+deficit+paul+ryan

    WSJ editorial: “ObamaCare’s Reality Deficit”

    I quote, “The accounting gimmicks are legion, but we’ll pick out a few: It uses 10 years of taxes to fund six years of subsidies. Social Security and Medicare revenues are double-counted to the tune of $398 billion. A new program funding long-term care frontloads taxes but backloads spending, gradually going broke by design. The law pretends that Congress will spend less on Medicare than it really will, in particular through an automatic 25% cut to physician payments that Democrats have already voted not to allow for this year.”

    “The CBO budget gnomes are required to “score” what’s on paper in front of them, no matter how unrealistic, and that’s the method its Congressional masters prefer. The political class makes believe that CBO’s forecasts are carved into stone tablets through divine revelation, but all they really show is that politicians have rigged the budget rules to hide the true cost of entitlements.”