Obamacare costs more than advertised, double-counting edition

I’ve written many times about the budgeting/accounting/scoring gimmicks that allowed Democrats to claim Obamacare would reduce federal deficits when the opposite is true. The latest piece of evidence came from Charles Blahous, an economist and trustee of the Social Security and Medicare programs who recently reported Obamacare’s “double counting” of spending cuts and tax increases means the law will actually increase deficits by $340 billion over 10 years (or about seven Buffett Rules).

Blahous, writing with former federal budget official James Capretta in today’s Wall Street Journal, explains double counting by making an analogy to Social Security:

If we generate $1 in savings within that program, then that’s $1 that Social Security can spend later. If we also claimed this same $1 to finance a new spending program, we would clearly be adding to the total federal deficit. There has long been bipartisan understanding of this aspect of Social Security, which is why Congress’s paygo rules prohibit using Social Security savings as an offset to pay for unrelated federal spending.

No such prohibition exists in the budget process against committing Medicare savings simultaneously to Medicare and to pay for a new federal program. It’s this budget loophole, unique to Medicare, that gives the health law’s spending constraints and payroll tax hikes the appearance of reducing federal deficits. But it is appearance, not reality. If you have only $1 of income and are obliged to pay a dollar each to two different recipients, then you will have to borrow another $1. This is effectively what the health law does. It authorizes far more in spending than it creates in savings.

So, perversely, the “pay-as-you-go” rules that President Obama and congressional Democrats touted as a measure of their fiscal responsibility back in 2009 are precisely what allowed them to engage in this duplicity. Blahous and Capretta explain further:

When Congress considers legislation that alters taxes or spending related to Medicare’s Hospital Insurance Trust Fund, the changes are recorded not just on the Hospital Insurance Trust Fund’s books, but also on Congress’s “pay-as-you-go” scorecard.

The “paygo” requirement is supposed to force lawmakers to find “offsets” for new tax cuts or entitlement spending, and thus protect against adding to future federal budget deficits. Putting the Medicare payroll tax hikes and spending constraints on the “pay-as-you-go” ledger was instrumental in getting the health law through Congress, because doing so fostered a widespread misperception that the law would reduce future deficits.

But the same provisions add to the Hospital Insurance Trust Fund’s reserves, which expands Medicare’s spending authority. Medicare can only pay full benefits so long as its trust fund has sufficient reserves to meet these obligations. If the trust fund has insufficient resources, then spending must be cut automatically to ensure the fund does not go into deficit. The health law’s Medicare provisions prevent these spending cuts from taking place for several more years.

It’s another reason why “paygo” rules (or lack thereof) don’t necessarily make Congress fiscally responsible (or irresponsible). What makes Congress responsible, or not, is its willingness to spend no more than it takes in.

And when Obama and Congress pass a law to take in $1, count that $1 twice, and then claim the ability to spend $2, there’s no way to spin it as fiscally responsible.

– By Kyle Wingfield

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313 comments Add your comment

I Report (-: You Whine )-: mmm, mmmm, mmmmm! Just sayin...

May 2nd, 2012
11:22 am

dummycrats believe that they know everything better than us and therefore have the “right” to protect us from ourselves.

I ask, are you personally acquainted with anyone who’s finances are a complete and utter sham, like the government run by liberals?

In reality, who is protecting us from them?

md

May 2nd, 2012
11:29 am

The bill was never about getting a healthcare bill that works……it was about getting something…..anything on the books while the dems had the numbers to do so……knowing full well how hard it would be to get it off the books later on.

Hence Obama’s back track at the SOTU address where he said jobs would be the #1 focus and came out guns a blazing afterward hell bent on ramming the hc bill through. He/they knew Scott Brown made that big a difference to the big picture.

Now, unless the SC strikes it down, we are stuck with yet another massive entitlement program in the stable with all the other unaffordable programs. The folks all want it, but too many don’t want to pay for it. It’s soooooo much easier pointing ones finger to the “rich” neighbor and his bank account.

Not Part of Romney's Flock

May 2nd, 2012
11:33 am

“like the government run by liberals?”

Doesn’t the House to some extent or another sign off on spending?

I agree it is too high……. period, but checking to see if the WH can just spend, spend and spend without any Congress approvals…….

JDW

May 2nd, 2012
11:36 am

@Kyle…if you want to discuss changing the budget rules on this issue that would be a valid discussion.

However to cite an source as you have and lay the resulting conclusion at the feet of a specific President and Congress without noting this bit FROM THE VERY SAME SOURCE

“Medicare spending cuts and tax increases have always been double-counted—recorded both on the paygo scorecard and added to the Hospital Insurance Trust Fund. No budgetary rules were bent.”

Well that seems a bit disingenuous and dare we irresponsibility spun.

Tiberius - Banned from Bookman's and proud of it!

May 2nd, 2012
11:38 am

“(or about seven Buffett Rules)”

Too funny, Kyle! :lol:

Kyle Wingfield

May 2nd, 2012
11:43 am

JDW: I never said they did anything illegal. They did, however, abuse the rules in a spectacular and cynical way — as Blahous/Capretta explain, this double-counting was done on a larger scale than before.

The rules were abused in order to pass off something utterly fiscally irresponsible as if it were responsible. That is what’s disingenuous here.

Kyle Wingfield

May 2nd, 2012
11:45 am

Thanks, Tiberius. I credit the president with giving us a good alternative measurement for budgetary matters!

Tiberius - Banned from Bookman's and proud of it!

May 2nd, 2012
11:50 am

JDW, a lie is a lie no matter who does it.

But let’s not use the “Everybody does it” defense just because what we told you was happening when the bill was being passed has come to light from another source.

JDW

May 2nd, 2012
11:51 am

@Kyle…”The rules were abused”

The point is that the rules were not “abused”. Is there a loophole that should be closed…maybe. But they no more “abused” the rules than did Mitt Romney by investing his fortune in such a way as to benefit from carried interest.

md

May 2nd, 2012
11:52 am

jdw,

Did you miss this line?:

“There has long been bipartisan understanding of this aspect of Social Security, which is why Congress’s paygo rules prohibit using Social Security savings as an offset to pay for unrelated federal spending.”

JDW

May 2nd, 2012
11:54 am

@md…”Did you miss this line?:”

Nope

Didn’t miss this one either…

“No such prohibition exists in the budget process against committing Medicare savings simultaneously to Medicare and to pay for a new federal program. “

Illegal Alien

May 2nd, 2012
11:58 am

Read or heard where several large corporations were considering dropping their HC plans and let their employees use the government option.

Cost saving to the corporations would be in the Billions. Sounds good for business. The increased tax revenue on business profits will help pay the increased costs to the government.

As bad as it is, single payer is about the only way to reduce HC costs accross the board. Insurance companies are gouging us while making huge profits.

Kyle Wingfield

May 2nd, 2012
11:58 am

JDW: But Romney doesn’t then turn around and say he’s paying twice as much in taxes as he really pays. The abuse didn’t take place in abiding by the rules, loophole included, but in using the loophole to lie — there’s no other word for it, given that the president and former congressional leadership are not stupid enough to think there really are $2 instead of $1 — about the impact of the law on the deficit.

Rafe Hollister

May 2nd, 2012
12:00 pm

Well, if anyone up there was serious, hah, about addressing the deficit or the national debt, they could easily fix the problem, by passing a simple bill using the same language as used in the Social Security legislation.

However, these big spenders do not want to correct the problem. Every dang one of them sat there and parroted the lies fed to them by the Oblama regime. You know the lies about it is not double counting, quoting the CBO figures while knowing that CBO numbers were rigged. They knew that the ten year numbers were rigged by including four years of tax increases and no payouts. Complete total dishonesty. I call it willful ignorance, they ask someone to give them a line to use to parry a question, and never give any thought as to whether it is true or not. They lie to others and to themselves, all to retain power.

Then the bloggers get on the blogs and parrot the lines used by the big spenders, which they know are untrue, but use anyway. It is criminal what is happening to our country, just because people want more than we can afford. As Tom Coburn says, the day of reckoning is coming but we have a choice. We can all suffer some now, or continue to lie to ourselves and suffer greatly in the end.

Tiberius - Banned from Bookman's and proud of it!

May 2nd, 2012
12:01 pm

“As bad as it is, single payer is about the only way to reduce HC costs accross the board.”

Single payer changes NOTHING in the cost of health care; only who is the payee.

Lil' Barry Bailout (Revised Downward)

May 2nd, 2012
12:02 pm

What a surprise! The spenders wrote the rules to allow themselves to spend, spend, and spend some more!

We’re supposed to think the spending is OK, since it isn’t against their rules.

Thomas heyward jr

May 2nd, 2012
12:03 pm

I’m sure John Kerry jr “all your medical money belongs to the state” Mittens “FeeFee” Romney …………………………..will figure it all out.

Lil' Barry Bailout (Revised Downward)

May 2nd, 2012
12:06 pm

So, libs, how is Obozo going to pay for the impact of this double counting, PLUS the other $1 trillion overrun in costs reported a couple of weeks ago by the CBO?

Progressive Humanist

May 2nd, 2012
12:07 pm

But for Republicans health care should be a for-profit industry. Yeah, that’s the moral position… If you’re a sleaze at your core.

DannyX

May 2nd, 2012
12:09 pm

“(or about seven Buffett Rules)”

Or we could use the payment method Republicans used for their socialist Medicare Part D, a huge tax cut. That ought to do it.

Rafe Hollister

May 2nd, 2012
12:11 pm

http://www.wnd.com/2012/04/more-evidence-obamas-a-depraved-liar/

Mychal Massie doesn’t mince words about Barry’s truthfulness. His opinion, believe what you wish.

Tiberius - Banned from Bookman's and proud of it!

May 2nd, 2012
12:11 pm

“But for Republicans health care should be a for-profit industry. Yeah, that’s the moral position…”

It is not for government to decide that which is moral, Progressive Humanist, nor to interfere in the lawful practice of a private business.

Sorry if that bursts your little nanny-state bubble.

Finn McCool (The System isn't Broken; It's Fixed)

May 2nd, 2012
12:13 pm

Will Newt quietly go away and allow Romney to deal with the arse-whuppin he is about receive come November?

landslide! Mwuahahahahahaha

md

May 2nd, 2012
12:14 pm

“Mittens “FeeFee” Romney …………………………..will figure it all out.”

He already has a better plan…….50 States with 50 programs working on the problem. Beats the hell out of one all power fed monster dictating one party’s whims…………

Lil' Barry Bailout (Revised Downward)

May 2nd, 2012
12:17 pm

Progressive Humanist: But for Republicans health care should be a for-profit industry. Yeah, that’s the moral position… If you’re a sleaze at your core.
———–

I suppose conscripting doctors, hospitals, insurers, and investors to work for free is moral.

Why do you support slavery?

Sleaze much?

Jefferson

May 2nd, 2012
12:19 pm

Folks what else do you work for ? Stuff costs, don’t hoard and worship your money, you can’t take it with you. Food, shelter and health this is the good life.

Rafe Hollister

May 2nd, 2012
12:19 pm

Will it be irony or justice, when the USA is finally financially destitute, that the ones who demanded the most and contributed the least, will be the most adversely affected by the situation?

I know who will be blamed, the producers, who didn’t contribute enough to satisfy the ever growing demand.

Lil' Barry Bailout (Revised Downward)

May 2nd, 2012
12:20 pm

Progressive Humanist, if you have a problem with profit, get out your “will work for food” sign and accept no more pay than will cover your basic living costs.

Anything more and you’re just the typical libtard hypocrite.

Finn McCool (The System isn't Broken; It's Fixed)

May 2nd, 2012
12:21 pm

I don’t see any lies there Rafe.

Depraved? Does this writer hyperbole much?

Ronnie Raygun

May 2nd, 2012
12:21 pm

Can we use this same stricter budgeting formula to rate the Ryan/Heritage Foundation budget?

Didn’t think so.

Not Part of Romney's Flock

May 2nd, 2012
12:24 pm

“Anything more and you’re just the typical libtard hypocrite.”

What is a “libtard”?

When it come to debating issues, name calling is known as a sign of weakness and usually reserved for those unable to articulate their ideas and thoughts in a meaningful and constructive manner

Lil' Barry Bailout (Revised Downward)

May 2nd, 2012
12:24 pm

Doesn’t matter, Ronnie, the Ryan budget will still score better than your Failed Messiah’s.

Ronnie Raygun

May 2nd, 2012
12:27 pm

“I suppose conscripting doctors, hospitals, insurers, and investors to work for free is moral.”

You mean like how police, firefighters, soldiers, and teachers all “work for free”?
The concept of a non-profit company paying employees isn’t that hard to understand, if you try. But then again, some people are just stuck on stupid.

carlosgvv

May 2nd, 2012
12:29 pm

So, in an election year, Obama is willing to push a law thru congress that actually costs twice what he says it will? And, Obama thinks no one will notice? Kyle, do you honestly think the American people are that dumb? More to the point, do you think most of us here are dumb enough to believe this story?

Not Part of Romney's Flock

May 2nd, 2012
12:29 pm

Kyle

Speaking of “double counting”, what’s up with the new information saying that the “give aways” to lure the new plant in Covington will be more than twice the original stated amount?

I’m for incentives, but will the Governor or someone on his staff be providing a pay back period for these “give aways”?

Lil' Barry Bailout (Revised Downward)

May 2nd, 2012
12:33 pm

When it come to debating issues, name calling is known as a sign of weakness
——-

So is changing the subject.

You can’t refute my arguments, so that’s all you have left.

Not Part of Romney's Flock

May 2nd, 2012
12:34 pm

And since I am not for Romneycare or Obamacare, I do think the Obama Administration owes the people some kind of analysis on long term savings, etc due to all this spending to implement the ACA

Common Sense

May 2nd, 2012
12:34 pm

Forward, Forward…..

they will figure out the details later.

Tiberius - Banned from Bookman's and proud of it!

May 2nd, 2012
12:35 pm

“So, in an election year, Obama is willing to push a law thru congress that actually costs twice what he says it will? And, Obama thinks no one will notice?”

Obviously, carlos, you didn’t notice that this is an article about the Obamacare law passed in 2010, NOT in an election year (for him at least). And the majority of the work was done in 2009.

And yes, he was banking on you to be that dumb.

Not Part of Romney's Flock

May 2nd, 2012
12:35 pm

Barry

Was just asking you a question and making a statement

If you feel the need to get all excited and name call like a kid…. do your thing and continue to demonstrate who you are as an individual

Tear it up

Ronnie Raygun

May 2nd, 2012
12:36 pm

Can Obama pay for everything in his budget with a magic asterisk of cutting unknown “loopholes and deductions” like Ryan & Mittens do in their budget? Or maybe he should just hide things off budget like Bush did with his wars.

The only way to pretend that GOP budgets work is if you believe in magic. Their numbers NEVER add up. So much for those home school educations.

Not Part of Romney's Flock

May 2nd, 2012
12:38 pm

Ronnie

Obama’s budget was kicked down Pennsylvania Avenue by both the Dems and Repubs

Ryan’s budget seems to work if we are at 2.8% unemployment

So it appears we have an issue on both sides of the aisle

That Black guy

May 2nd, 2012
12:41 pm

Finn McCool (The System isn’t Broken; It’s Fixed)

May 2nd, 2012
10:22 am
Lil Barry, do you know what AGI is? Adjusted Gross INCOME.
Wealthy people don’t get their money from INCOME.

Finn McCool (The System isn’t Broken; It’s Fixed)
May 2nd, 2012
10:56 am
Fair would be the 1% paying 1% of federal income taxes.
Ok, I’ll play. Then fair would be the 1% earning 1% of all national income
_____________________________________________________________________

So, Finn, do they earn income or not?

Lil' Barry Bailout (Revised Downward)

May 2nd, 2012
12:46 pm

Finn thinks investment income isn’t included in AGI.

‘Nuff said on any of his financial or economic opinions.

Progressive Humanist

May 2nd, 2012
12:47 pm

And the funny thing is that the amoral sleazeball hicks like Barry and Tib will vote for Romney, who wrote the blueprint for ObamaCare. They want U.S. citizens to die so empty suits can make a profit (pretty patriotic by the way) and they’re going to vote for the empty suit who thought up the “socialist” health care plan to begin with. But because of their lack of intellect and education, Barry and Tib will be the ones who will need the social services like government health care, social security, etc. because they’ll never be able to make enough on their own (although, like Joe the Plumber, they aren’t smart enough to know it).

Lil' Barry Bailout (Revised Downward)

May 2nd, 2012
12:51 pm

LOL @ Progressive Humanist. Funny on so many levels.

There is apparently some mental defect that causes people to think its preferable to vote for Obozo because Romney isn’t conservative enough.

Not Part of Romney's Flock

May 2nd, 2012
12:52 pm

Progressive @ 12:47

It is called carrying the water for the top end…….. It is done by the “flocks” on all sides and most don’t even know they are doing it…..

Even those who say they are not D or R, yet vote mostly D or R………. have bucket in hand and both parties love them for it

Illegal Alien

May 2nd, 2012
12:52 pm

Single payer has a better chance of controlling costs. If everybody had HC insurance then those of us that have plans would probably get a break, since we would no longer be paying for those that don’t pay.

real john

May 2nd, 2012
12:56 pm

Lets call Obamacare what it really is… A massive expansion of Medicaid..

Liberals will never admit that they are going to bankrupt this country. My guess it the s@@@ will hit the fan in the next 10 years. This isn’t utopia…We can’t provide everything to everyone. We only have so much money

Rafe Hollister

May 2nd, 2012
1:00 pm

Finn

I knew you would not find anything of value there. I call it willful self deception. See my 12:00 post, there is a great deal of that going on in both parties. That is why we are where we are.