By Dan Calabrese ——Bio and Archives--March 21, 2017
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Three factors contribute significantly to widespread confusion about the ACA’s damaging fiscal effects. The first is that many of the provisions designed to finance its expansion of insurance coverage haven’t borne fruit. Various financing provisions have instead been repealed, suspended, postponed or weakened by regulation. More than half of the ACA’s projected deficit reduction over its first 10 years was to come from surplus operations of its long-term care program called Community Living Assistance Services and Supports, or Class, which was suspended in 2011 and repealed in 2013 because it was actuarially unsound. The ACA’s “Cadillac tax” was immediately postponed until 2018 in the 2010 reconciliation bill; later it was weakened and further postponed until 2020. The ACA’s health-insurance fees and medical-device taxes have been suspended. Expected revenues from the individual and employer mandate penalties were reduced, first by delaying their implementation and later via new exemptions. As these various financing mechanisms have been weakened or discarded, the ACA’s financial effect has become more unfavorable than even the most pessimistic critics predicted. The second confusing factor is the complex system of scorekeeping rules Congress imposes on the Congressional Budget Office, which evaluates the budgetary effects of legislation. Those rules require the CBO to compare the effects of legislation to a baseline that differs from actual law in various critical respects.
Specifically, the CBO was required to compare its projections for the ACA to an assumption that lawmakers would otherwise enact legislation to increase allowable spending by the Medicare Hospital Insurance Trust Fund. The CBO projected that the ACA would reduce deficits only relative to this hypothetical Medicare spending increase; scorekeeping under the requirements of the existing Medicare law would instead have shown the ACA increasing deficits. The third significant reason for confusion has been misinterpretation of intermittent CBO reports over the past several years on the evolving cost estimates for the ACA’s coverage expansion. These have tended to come in below initial projections due to lower-than-expected enrollment in the ACA’s insurance marketplaces, and to a deceleration in national health-spending growth that began before the ACA was enacted, but for which the data were not widely available until afterward. These reports of seemingly good fiscal news have only reflected certain specific pieces of ACA finances. We have not received similar reassessments of the ACA’s various financing provisions that have fallen apart.Blahous estimates that the real 10-year savings from repealing ObamaCare may be as much as $1 trillion rather than the CBO's guess of $337 billion, precisely because the CBO is not allowed to take into consideration likely long-term impacts on markets like the ones Blahous talks about here.
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