Health Care Repeal Won't Add to the Deficit

One of the Democrat's biggest arguements against repeal of the health care bill is that it would add $230 billion to the deficit over the next 10 years. This was based on estimates by the CBO.

Here is an interesting editorial written by a former director and assistant director of the CBO. It explains the techniques used to make it appear that there will be savings. The CBO in it's estimate just had to use the information given to them, even though many assumtions will probably never happen, in which case the deficit reduction will go away.

http://online.wsj.com/article/SB10001424052748703954004576089702354292100.html

How, then, does the ACA [Affordable Care Act] magically convert $1 trillion in new spending into painless deficit reduction? It's all about budget gimmicks, deceptive accounting, and implausible assumptions used to create the false impression of fiscal discipline.

For starters, that $1 trillion price is a low-ball estimate, covering only six – not ten – years of subsidies that don't begin until 2014. The uninsured were clearly less of a priority than the deception of making the law look less expensive than it really is over its first decade. Over ten years of full implementation, it's more like $2.3 trillion.

Next up is the CLASS Act (for the Community Living Assistance Services and Supports Act) providing a new long-term care insurance entitlement. CLASS hitched a ride on the ACA for one reason only: premiums are collected in the first ten years, but no benefits are provided. Voila, it creates the perception of $70 billion in deficit reduction. In fact, CLASS is a bailout waiting to happen, as it will attract mainly sick enrollees. Only in Washington could the creation of a reckless entitlement program be used as "offset" to grease the way for another entitlement.

The deepest spending cuts in the ACA are in Medicare. Let us be very clear: Medicare needs real reform that generates genuine budget savings. Sadly, the ACA's cuts are illusory. Medicare's payments to health care providers would fall below those of Medicaid. The network of hospitals and physicians willing to care for Medicaid patients is notoriously constrained. About 15 percent of the nation's hospitals would have to stop seeing Medicare patients in just a few years to stem their losses. The idea that Medicare could pay less than Medicaid is such sheer folly that Congress will rapidly reverse course. What's worse, ACA's advocates are double-counting this fictional savings, claiming it can pay both for the ACA's entitlements and Medicare solvency too. The truth is, these cuts cannot be relied upon to pay for anything.

Garbage in, garbage out.....