What would it cost to repeal ObamaCare?
Democrats and liberal pundits have made the argument that repealing ObamaCare would be a budget-buster. This is incorrect on two levels. First, Republicans would replace ObamaCare with something else; the decision is not ObamaCare vs. nothing, but, rather, ObamaCare vs. the Republican alternative.
The second problem with the argument is that it accepts at face value the phony accounting on which the Democrats based their legislation. As House Budget Chairman Paul Ryan (R-Wisc.) explained today in a written statement:
"The Democrats' health care law is a budget buster. Misleading claims on its deficit impact exclude the $115 billion needed to implement the law and over $500 billion in double-counting Social Security payroll taxes, CLASS Act premiums, and Medicare reductions. The law was written to measure 10 years of tax increases to offset 6 years of new spending. The Democrats stripped costly provisions that were included in initial score, and enacted them separately to add hundreds of billions of dollars to the deficit. Hiding spending does not reduce spending. There is no question that the creation of a trillion dollar open-ended entitlement is a fiscal train wreck.
Ryan has detailed at length why ObamaCare doesn't, in fact, save money:
The CBO score did not include the cost of setting up and administering the massive overhaul, including the cost of hiring new health-care bureaucrats to run the new spending programs, as well as thousands of IRS agents to enforce the new mandates.
Accounting for these discretionary appropriations would add $115 billion to the bill's ten-year cost, all but wiping out its alleged "savings."
The new law double-counts an estimated $521 billion in alleged offsets:
Social Security will receive an additional $53 billion in higher payroll tax revenue as a result of the new law. Instead of setting aside this revenue for promised Social Security benefits, the bill spends it on new subsidies.
Democrats claim they are extending solvency of Medicare by cutting $398 billion from the program, but they simultaneously claim that these savings will offset new subsidy programs. CBO has made clear these savings cannot be used twice.
The Democrats' bill created the CLASS program, a brand new long-term care entitlement. Over first ten years, program would take in $70 billion in premiums, but instead of setting money aside to pay for future benefits, the bill spends the premiums on new subsidies. Senate Budget Chairman Kent Conrad called the CLASS Act: "A Ponzi scheme [that] Bernie Madoff would have been proud of."
The Democrats' bill originally included the "doc fix" that CBO estimated would add $208 billion to the bill's score. Democrats removed this provision to lower the bill's CBO score, but promised doctors that they would enact the fix later, and did in fact pass a short-term prevention of cuts to physician payments last year, adding to the deficit.
Add it up - $115 billion in discretionary costs, plus $521 billion in double-counting, plus $208 billion for a long-term doc fix (minus the $143 billion of claimed savings) - and the law would add $701 billion to the deficit over the next ten years.
(Last year, Ryan addressed many of the same issues in a reply, via Facebook, to Ezra Klein. It is worth reading in full.)
Moreover, as The Post
reported last week, costs may be even higher:
An early feature of the new health-care law that allows people who are already sick to get insurance to cover their medical costs isn't attracting as many customers as expected.
In the meantime, in at least a few states, claims for medical care covered by the "high-risk pools" are proving very costly, and it is an open question whether the $5 billion allotted by Congress to start up the plans will be sufficient.
And available data shows that, as conservatives fully anticipated, the costs are much higher than the Democrats calculated. More from The Post:
Montana is one of a few states in which the medical bills from those who have joined are huge. New Hampshire's plan has only about 80 members, but they already have spent nearly double the $650,000 the state was allotted in federal money to help run the program, said J. Michael Degnan, its director.
The spending, Degnan speculated, might slow down if it turns out that the early bills reflected a burst of pent-up need for care. HHS agreed to give New Hampshire more money, he added.
When the law was passed, proponents of the special health plans feared the $5 billion would run out before 2014.
And here is a further consideration: ObamaCare assumes that states will take the lead in setting up the health-care exchanges. But this is increasingly looking like a faulty assumption. Back in May, Indiana Gov. Mitch Daniels let it be known that he was not interested in expanding the state high-risk insurance pool and would force the federal government to do so. What if he said the same about the entire architecture of ObamaCare, namely the exchange that would be set up in his and the other 49 states? If that sentiment spreads to, say, 29 states headed by Republican governors, will HHS be able to manage 29 state exchanges and keep it all within the budget parameters of ObamaCare? It is highly unlikely.
But, listen, this is precisely the sort of issue on which Congress should hold extensive oversight hearings. Let's go through the numbers. Is Ezraright or are Ryan and conservative critics of ObamaCare right? Stay tuned.
| January 6, 2011; 1:00 PM ET
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