One of the big selling points of the Affordable Care Act (ACA), better known as ObamaCare, was that despite its massive new spending initiatives it would somehow reduce the federal deficit. But a new study by Medicare trustee Charles Blahous finds that absent repeal of major provisions of ObamaCare, the law could add as much as $527 billion to the deficit over the next decade.
Blahous, a Republican, is a senior research fellow at George Mason University’s Mercatus Center. His report, “The Fiscal Consequences of the Affordable Care Act,” concludes that “relative to prior law, the ACA would increase an already unsustainable federal commitment to health care spending, exacerbate projected federal deficits, and thus considerably worsen the federal fiscal outlook.”
No one, including the law’s most ardent supporters, denies that the ACA will lead to greater federal spending. When the law was passed in 2010 the Congressional Budget Office (CBO) estimated that it would cost $940 over the coming decade. In March an updated forecast taking into account two more years of spending found that ObamaCare would now cost almost twice as much, or $1.7 trillion, over the next 10 years.
ObamaCare fans, however, have argued that this increased short-term spending will ultimately lead to decreased long-term spending. Blahous shows that this assertion is false.
The law does not reduce deficit spending, Blahous says, because it counts projected Medicare savings twice. By law Medicare cannot spend more than its trust fund contains; instead, benefits must be reduced or other savings must be found. In either case, the money “saved” is not used to reduce the deficit but to finance further benefits.
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