Jan 06 2011
Today the Congressional Budget Office (CBO) released its preliminary analysis of H.R. 2—a bill to repeal health care law—that will is expected to pass the House when it receives a vote on January 12th.
While some news headlines focus on the projected deficit increase from repealing PPACA and HCERA in this particular analysis, CBO did not account for the budgetary impact of the CLASS Act, untenable Medicare cuts, or other provisions widely critiqued by nonpartisan experts as unsustainable. CBO has commented about some such provisions here. Dr. Coburn has produced an analysis of the CLASS Act on page 18 here.
Beyond the headlines, it’s important to look at what CBO actually said…..
• 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…”
• 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.7 In contrast, CBO estimated that enacting that legislation would reduce the federal budgetary commitment to health care during the decade after 2019.”
• CBO Reviewed the Repeal Bill, But a Detailed Analysis is Still Forthcoming. “The Congressional Budget Office (CBO) has reviewed H.R. 2, the Repealing the Job-Killing Health Care Law Act, as introduced on January 5, 2011. That bill would repeal the Patient Protection and Affordable Care Act (PPACA, Public Law 111-148) and the provisions of the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152) that are related to health care….. CBO has not yet developed a detailed estimate of the budgetary impact of repealing that legislation, although it is working with the staff of the Joint Committee on Taxation (JCT) to complete such an estimate in the near future. Because Congressional deliberations on H.R. 2 could begin very soon, CBO is providing in this letter a less-detailed preliminary analysis of that legislation.”
• 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.”
• 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..”
• 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.”
• 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.”
• 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.”