To show you how far down the rabbit hole we’ve gone, Democrats were pleased yesterday when the Congressional Budget Office gave the two ObamaCare bills — the Senate bill plus the “reconciliation” bill the House would use to “fix” it — a combined cost of “only” $940,000,000,000 over 10 years (see page 8). But as you already know if you’ve been paying attention to this blog, there’s more here than the headline number suggests.
First, as the Weekly Standard’s Jeffrey Anderson points out, CBO begins the 10-year clock in 2010. What year is it right now? Oh yes, 2010. When did the 2010 budget year begin? Oh yes, Oct. 1, 2009 — more than five months ago.
Granted, this is not an unusual CBO convention. But it is a special case because the vast majority of the new ObamaCare expenditures don’t kick in for four more years — which is unusual for a piece of legislation. So, the inclusion of a cheap year rather than a full-price year makes a huge difference in the cost estimate.
For the record, this four-year delay is shown quite clearly in two places:
If we begin the 10-year clock for this bill in 2014, and assume the 7.5 percent growth in annual gross costs which the CBO applies in 2018 and 2019 would continue in later years, the cost from 2014-2023 would be $2 trillion. That’s equivalent to 2.5 “stimulus” bills. Anderson writes that ObamaCare includes more than $1 trillion in new taxes to help pay for itself.
Even if we are more charitable, and begin counting next year rather than this year with the same assumptions as above, the 10-year cost from 2011-2020 would be $1.2 trillion.
Ah, but what about net costs — that is, the effect on the budget deficit? Didn’t the CBO say the deficit would fall by a combined $138 billion from 2010 to 2019?
Yes, it did. But where does that $138 billion come from? Well, the majority of it comes from new taxes, which are a legitimate debate policy debate, even if I come down strongly against the new levies.
But $493 billion of the bill’s budget offsets come from reductions in federal spending on Medicare and Medicaid. The bulk of this half-trillion comes from two places. The first is gutting Medicare Advantage ($132 billion). The second is an assumption that Congress will reduce payments to doctors who see Medicare patients ($157 billion) — something that no Congress has ever actually done.
And here again, in all cases of spending reductions, the vast majority of the changes come from 2014 on. That means the net reduction in the deficit is contingent on future Congresses following through on what this Congress promises to do — and what no past Congress has ever done.
In reality, as opposed to paper, ObamaCare is highly likely to increase the deficit by hundreds of billions of dollars rather than cut it. Reps. John Lewis, Hank Johnson, David Scott, John Barrow and Sanford Bishop — Georgia’s Democrats in Congress who either plan to vote for ObamaCare or are on the fence about it — may not care about this. But the rest of us should.