The federal health reform law between 2012 and 2021 is poised to increase federal net spending by more than $1.15 trillion and add between $340 billion and $530 billion to the federal deficit, according to a report released on Tuesday by the GOP trustee for Medicare and Social Security, Reuters reports (Crawley, Reuters, 4/10).
The report -- by Charles Blahous, a senior research fellow at the Mercatus Center at George Mason University who served as an economic adviser in the George W. Bush administration -- was quickly disputed by Obama administration officials, who said it strays from bipartisan budget rules, according to the Washington Post (Montgomery, Washington Post, 4/9).
According to the Congressional Budget Office, the law is still expected to help reduce the budget deficit. In 2010, CBO estimated that if the law is repealed, the deficit would increase by $210 billion between 2012 and 2021 (Alonso-Zaldivar, AP/San Francisco Chronicle, 4/10).
In his report, Blahous argues that the administration "double counted" savings from cutting Medicare provider payments by applying them to both extend the solvency of the Medicare trust fund and help finance the Medicaid expansion in the overhaul (Washington Post, 4/9).
Blahous also cites several factors that led to his conclusion, including the Obama administration's decision to suspend implementation of the overhaul's Community Living Assistance Services and Supports program, which would have generated more than $80 billion in revenue but eventually created additional expenses. Further, the cost of subsidies to help people purchase insurance coverage could be higher than anticipated and various measures to control spending might not work as intended.
Obama Administration Refutes Report
Jeanne Lambrew, an assistant to the president on health policy -- in a White House blog post on Tuesday -- criticized the study as "new math (that) fits the old pattern of mischaracterizations" about the overhaul (AP/San Francisco Chronicle, 4/10). Lambrew said the Office of Management and Budget and CBO "have never given a discount in deficit reduction due to a 'double counting' of Medicare savings in an estimate of the impact of legislation."
Lambrew also quoted the Center on Budget and Policy Priorities as saying that claims of “double counting” are "without merit" because the savings were "accounted for in exactly the same way in previous Congresses under both political parties" (The White House Blog, 4/9).