Red State Advances Bogus Claim That Repeal of Health Care Reform Will Not Increase Deficit

Blog ››› ››› KAREN FAMIGHETTI

A post that appeared on the front page of Red State today claimed that "Repeal of the Job-Killing Health Care Act will NOT Increase the Deficit." To defend that argument, Red State reprints Sen. Tom Coburn's distortions of a Congressional Budget Office report on H.R. 2, the proposed repeal of the Patient Protection and Affordable Care Act (PPACA).

Let's break down the claims.

The first claim Red State reprints is:

Repeal Reduces Health Insurance Costs for Americans. "In particular, if H.R. 2 was enacted, premiums for health insurance in the individual market would be somewhat lower than under current law..."

This sounds convincing, until you read the full context of this phrase in the CBO report and find that many people would pay more for health insurance if PPACA were repealed:

In particular, if H.R. 2 was enacted, premiums for health insurance in the individual market would be somewhat lower than under current law, mostly because the average insurance policy in this market would cover a smaller share of enrollees' costs for health care and a slightly narrower range of benefits. The effects of those differences would be offset in part by other factors that would tend to raise premiums in the individual market if PPACA was repealed; for example, insurers would probably incur higher administrative costs per policy and enrollees would tend to be less healthy, leading to higher average costs for their health care. Although premiums in the individual market would be lower, on average, under H.R. 2 than under current law, many people would end up paying more for health insurance--because under current law, the majority of enrollees purchasing coverage in that market would receive subsidies via the insurance exchanges, and H.R. 2 would eliminate those subsidies. (emphases added)

The second claim is:

Repeal Reduces Federal Spending on Health Care. "Last March, CBO estimated that enacting PPACA and the relevant provisions of the Reconciliation Act would increase the "federal budgetary commitment to health care" by about $400 billion over the 2010-2019 period; CBO uses that term to describe the sum of net federal outlays for health programs and tax preferences for health care. In contrast, CBO estimated that enacting that legislation would reduce the federal budgetary commitment to health care during the decade after 2019."

This claim is simply self-refuting. CBO is saying that PPACA increased federal health care by about $400 billion over the 2010-2019 period. But even the part that Red State quoted says that PPACA will "reduce the federal budgetary commitment to health care during the decade after 2019."

Furthermore, the full context makes crystal clear that the repeal bill would result in "diminishing the federal budgetary commitment to health care over the next decade and increasing it in subsequent years":

Last March, CBO estimated that enacting PPACA and the relevant provisions of the Reconciliation Act would increase the "federal budgetary commitment to health care" by about $400 billion over the 2010-2019 period; CBO uses that term to describe the sum of net federal outlays for health programs and tax preferences for health care. In contrast, CBO estimated that enacting that legislation would reduce the federal budgetary commitment to health care during the decade after 2019. The impact in the second decade was estimated to be different than that in the first decade because the effects of those provisions that would tend to decrease the federal budgetary commitment to health care would grow faster than the effects of provisions that would tend to increase it. Correspondingly, by repealing all of those provisions, H.R. 2 would roughly reverse those outcomes, thereby diminishing the federal budgetary commitment to health care over the next decade and increasing it in subsequent years. (emphasis added)

The third claim is:

The Promised Deficit Reduction From the Overhaul Has Changed Slightly. "The projected increase in deficits will not be exactly the same as the reduction in deficits that was originally estimated to result from the enacted legislation....[because] the economic outlook is now somewhat different.... Some of the funding provided by the legislation enacted last March has been obligated or spent... Subsequent legislation has already modified the laws enacted last March."

While these are accurate quotes from the CBO report, they are followed by the explanation that these changes "will probably not have a major effect on the overall budget impact of the bill through 2019":

The changes noted above will affect many elements of a detailed estimate of the impact of H.R. 2, but they will probably not have a major effect on the overall budgetary impact of the bill through 2019. Moreover, in its ongoing monitoring of developments, CBO has seen no evidence to date that the steps that will be taken to implement the March legislation--or the ways in which participants in the health care and health financing systems will respond to that legislation--will yield overall budgetary effects that differ significantly from the ones that CBO and JCT projected earlier. As a result, for the 2012-2019 period, the forthcoming detailed cost estimate for H.R. 2 will probably not differ substantially from the result that would be obtained by reversing the signs of the net changes in deficits that were shown in the cost estimate for PPACA and the Reconciliation Act that CBO issued on March 20, 2010. (emphases added).

The fourth claim is:

Now Repeal "Costs" $145 Billion. "CBO expects that enacting H.R. 2 would probably increase federal budget deficits over the 2012-2019 period by a total of roughly $145 billion.."

This sentence directly refutes the headline and premise of Red State's post. The CBO report goes on to explain how CBO arrived at this number:

That figure consists of the following two components:

  • About $130 billion, representing the net reduction in deficits over the 2012-2019 period expected to result from the health care provisions of the enacted legislation (as estimated by CBO and JCT last March), plus
  • About $15 billion, representing the reduction brought about by the Medicare and Medicaid Extenders Act of 2010 in the estimated cost of subsidies to be provided through the insurance exchanges through 2019.

The fifth claim is:

But CBO Was Forced To Score the Initial Bill -Full of Smoke and Mirrors - as it Was Written. "As with all of CBO's cost estimates, those estimates reflect an assumption that the provisions of current law would otherwise remain unchanged throughout the projection period and that the legislation being considered would be enacted and implemented in its current form. CBO's responsibility to the Congress is to estimate the effects of proposals as written and not to forecast future legislation."

The quote from the CBO report is accurate, again taken out of context. This statement is in reference to CBO's evaluation of H.R. 2, the bill in question that would repeal PPACA, not to its original evaluation of PPACA itself. This just proves that CBO estimates all bills with the assumption that "the provisions of current law would otherwise remain unchanged."

The sixth claim is:

CBO Admits Actual Costs of the Overhaul Could Be Much Higher. "Projections of the bill's budgetary impact are quite uncertain.....However, CBO's staff, in consultation with outside experts, has devoted a great deal of care and effort to the analysis of health care legislation in the past few years, and the agency strives to develop estimates that are in the middle of the distribution of possible outcomes. As a result, CBO believes that its estimates of the net budgetary effects of health care legislation have a roughly equal chance of turning out to be too high or too low."

While this is an accurate quote from the CBO report, the quote itself shows that CBO believes there is an equal chance that the bill could be "too high or too low." Therefore, the take on this quote equally could be "CBO Admits Actual Costs of the Repeal Could Be Much Higher."

The seventh claim is:

So, if the Current Law Were Changed Significantly (As Many Experts Anticipate), Repealing the Overhaul Could Reduce the Deficit.

"The budgetary impact of repealing PPACA and the provisions of the Reconciliation Act related to health care could be quite different if key provisions of that original legislation would have subsequently been changed or not fully implemented..... Current law now includes a number of policies that might be difficult to sustain over a long period of time. For example, PPACA and the Reconciliation Act reduced payments to many Medicare providers relative to what the government would have paid under prior law. On the basis of those cuts in payment rates and the existing "sustainable growth rate" mechanism that governs Medicare's payments to physicians, CBO projects that Medicare spending (per beneficiary, adjusted for overall inflation) will increase significantly more slowly during the next two decades than it has increased during the past two decades. If those provisions would have subsequently been modified or implemented incompletely, then the budgetary effects of repealing PPACA and the relevant provisions of the Reconciliation Act could be quite different -- but CBO cannot forecast future changes in law or assume such changes in its estimates."

This quote makes the self-evident statement that if the law is changed, CBO's projections might no longer be correct.

There is still no getting around this clear statement from the CBO report:

As a result of changes in direct spending and revenues, CBO expects that enacting H.R. 2 would probably increase federal budget deficits over the 2012-2019 period by a total of roughly $145 billion, plus or minus the effects of technical and economic changes that CBO and JCT will include in the forthcoming estimate.

Red State's post concludes with this statement:

In truth, as far back as March of last year the CBO was clear that Obamacare could do a minimum of $600 Billion in damage to the deficits by it's second decade in law which would automatically put repeal at a savings of $455 Billion over the next two decades.

The American Spectator article this links to explains that this projected $600 billion increase in the deficit assumes that some of the provisions of PPACA designed to help pay for it are not enacted. The article gives no reason to assume that they would not be enacted, other than that they are ostensibly "unpopular."


Posted In
Economy, Budget, Health Care, Health Care Reform
Show/Publication
Red State
We've changed our commenting system to Disqus.
Instructions for signing up and claiming your comment history are located here.
Updated rules for commenting are here.