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Some Details on Why Repeal of PPACA Would Increase the Deficit

Via CSM’s The Vote blog:  Health care law repeal: Why would it increase the deficit?

Two main side effects of repeal would cause this gusher of red ink, said CBO.

First, getting rid of health-care reform would mean rescinding planned cuts in federal spending on health care, largely for Medicare.

Under the terms of Obama’s health bill, government payments to Medicare Advantage – plans run by private insurers that are an alternative to traditional Medicare – are supposed to be reduced by $132 billion over a decade, for instance. (Those plans now get around 14 percent more per person than traditional Medicare does.) Payments for Medicare home health care would also be slashed by around $40 billion over ten years.

Second, repealing health-care reform would also entail rolling back scheduled tax increases and fees.

For example, individuals making over $200,000, and couples making over $250,000, face higher Medicare Part A (that’s hospital insurance) taxes under Obama’s health reforms. Their Part A tax rate is supposed to go up 0.9 percent on January 1, 2013. That’s a big money raiser, estimated to bring in $210 billion between 2013 and 2019. And it would be eliminated if the health care reform law is repealed. So would planned fees levied on insurers, medical device manufacturers, and others.

Whether one is pro-PPACA or pro-repeal, the numbers are the numbers.   Further, it is clear that (at least symbolically, since this is all going nowhere), the GOP values repeal over deficit reduction.   That is, actually, quite fair as politics requires tradeoffs.  However, it is yet another example (two more that come to mind are here and here) that there appears to be a chasm between the GOP’s rhetoric on fiscal policy and their reality.

h/t:  No More Mister Nice Blog

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About Steven L. Taylor
Steven L. Taylor is Professor of Political Science and Dean of the College of Arts and Sciences at Troy University. His main areas of expertise include parties, elections, and the institutional design of democracies. His most recent book is the co-authored A Different Democracy: American Government in a 31-Country Perspective. He earned his Ph.D. from the University of Texas and his BA from the University of California, Irvine. He has been blogging since 2003 (originally at the now defunct Poliblog). Follow Steven on Twitter

Comments

  1. Neil Hudelson says:

    But Redstate says that everything will be fine and the CBO is lying…so who are you going to believe? A nonpartisan panel trained in these sorts of matters or a blog by a guy who called a Supreme Court justice a diddler of goats?

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  2. lizbuddie says:

    Wrong! I’m surprised and disappointed that OTB is perpetuating this misinformation. (And by a LONGHORN, no less? Ugh!) As you know, the CBO has to do the math as if the presumptions that Congress gives it are true, and the promises Congress makes will be kept. That’s their job, the rules by which they are confined. Congress, OTB and the rest of us are not similarly restricted. We are not required to suspend our common sense.

    First, the CBO numbers are only for the first ten years. As you surely know, the ten year estimates have a head start of tax and fee collection before the goodies start going out. We aren’t required to pretend that the PPACA bill magically expires or pays for itself after that first ten years. Second, the CBO estimates assume the $500B in cuts to Medicare would actually be agreed to and enacted, even though that body has given us no reason to believe they would. Third, the CBO estimates presume an (overly?) optimistic rate of growth.(4%!) Fourth, it didn’t count the ‘doc fix’ which will need to be dealt with, unless the plan to reduce Medicare costs is to have no doctors willing to accept Medicare. Fifth, the CBO apparently left out the costs of implementation of the act (which some folks estimate at around $115B). Sixth, you get the idea…

    The CBO is required to answer the questions that Congress presents it, wherein there is a set of presumptions. When those presumptions aren’t realistic, neither are the answers. Garbage in, garbage out.

    These are just SOME of the direct, ‘Stage One’ reasons why the CBO estimates don’t represent the real-world negative effects of the PPACA on the budget. No telling what the indirect effects will be. How might they negatively affect revenues through lost profits and lost jobs? There go more CBO presumptions! Many economists and business analysts say the negative impact to the federal budget from PPACA will be enormous. The myriad indirect effects will surely be many and will take years to fully appreciate.

    It is not “clear” at all that the GOP/repeal supporters are putting repeal above deficit reduction. First, that assertion presumes that they don’t desire to enact other, more realistic reforms that would actually lower medical costs in this country and lower the corresponding budget items. (Again, how disappointing that OTB is perpetuating this unfortunately popular false choice between PPACA and doing nothing.) But even if we were to assume that, I suspect most, if not all, GOP/repeal supporters see repeal of the PPACA and deficit reduction as utterly consistent goals.

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  3. Dave says:

    liz — I suppose it’s all a matter of who you trust, but at this point I think it’s more likely the law will continue to exist as written, passed and signed (thus reducing the deficit as scored) than it is the GOP will somehow repeal the whole of it, only to then immediately replace the current active reforms with some sort of fantasy cure-all deficit reducing magical health care fix.

    As someone concerned with the size and shape of the deficit, I’ll take the ObamaCare bird in the hand over the GOP’s so far unspecified chimera flock in the bush. As far as I can tell, the only people talking about undoing the necessary cuts to Medicare are Paul Ryan and his Republican colleagues.

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  4. Herb says:

    “Further, it is clear that (at least symbolically, since this is all going nowhere), the GOP values repeal over deficit reduction.”

    Yep, and what’s worse….it’s not at all clear that they favor repeal based on the quality of the law. Indeed, the whole repeal push seems to be more about sticking it to Obama and appearing noble and righteous to their base.

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  5. […] Note (James Joyner):    Steven has posted a follow-up titled “Some Details on Why Repeal of PPACA Would Increase the Deficit.”    Since it’s “hidden” in the Quick Picks section, I’m […]

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  6. sam says:

    @Liz

    First, that assertion presumes that they don’t desire to enact other, more realistic reforms that would actually lower medical costs in this country and lower the corresponding budget items.

    I’ve heard this from a number of Republicans, but I haven’t been able to find any examples of what they have in mind in the way of reforms except for generalities. Can you point me to a site that has some specific details?

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  7. An Interested Party says: