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
Tell us what you think about the site
Customer Care »
Vacation stops, manage subscriptions and more
AJC Services
Sections
Other Editions
Visitor Agreement | Privacy Statement
© 2013 The Atlanta Journal-Constitution
313 comments Add your comment
Tiberius - Banned from Bookman's and proud of it!
May 2nd, 2012
2:35 pm
“Most think its the extreme austerity measures are causing the problems.”
Oh, you’ve spoken to “most” people, Ernest T.?
You DO realize your source for that article is the most in-the-tank organization for liberalism in the news media, don’t you?
Grasshopper
May 2nd, 2012
2:37 pm
“Why is it that every other first world country in the world has universal healthcare and they are doing just fine ?”
You mean Greece, Spain, Portugal and the UK are doing just fine?
AmVet
May 2nd, 2012
2:38 pm
Republicans have a plan to cut spending: “cut spending.”
What a laugh.
Too bad that based on the last thirty years of the Republican Party exploding the amount of spending, it was only a plan…
Spendaholic neocons – from Reagen through geeDub – talking about cutting spending is like hookers talking about cutting prostitution…
AmVet
May 2nd, 2012
2:40 pm
“Why is it that every other first world country in the world has universal healthcare and they are doing just fine ?”
The better question to ask is that out of the 32 industrialized nations in the world, why is the United States the only one without it?
C from Marietta
May 2nd, 2012
2:46 pm
@ Jefferson
I worked three jobs and went to school full time. NO ONE paid for my college but me. I am suppose to share with someone that got drunk and did not get an education? I am not rich, but certainly not jealous of someone that got that way. Don’t give me this mindless 1% stuff. Did you get your job from one of the mindless 99% idiots? Business men make this country. Not some useless leach politician lying to you to get your vote. I bet you love your iPhone and HD TV. Guess what one of those evil 1% business men put up the money to develop them.
real john
May 2nd, 2012
2:46 pm
AmVet:
“The better question to ask is that out of the 32 industrialized nations in the world, why is the United States the only one without it?”
Because most of those nations don’t have 100 million free loaders who suck up large amounts of money. I would love to see how many of those countries would take care of millions of illegal immigrants like the U.S. does.
Its like Mass example. Universal coverage maybe can work on a small scare. Mass is also in the top two or three states in percentage of people in income/wealth which makes it work. However, I had serious doubts how Romneycare would work in a state like Miss or Arkansas for example
getalife
May 2nd, 2012
2:47 pm
One day we will join the rest of the civilized world.
Tiberius - Banned from Bookman's and proud of it!
May 2nd, 2012
2:48 pm
“The better question to ask is that out of the 32 industrialized nations in the world, why is the United States the only one without it?”
Because we believe in American exceptionalism, not dragging ourselves down to someone else’s level of mediocrity.
getalife
May 2nd, 2012
2:49 pm
It’s corporate welfare cons.
You are for that welfare.
Georgia, The " New Mississippi "
May 2nd, 2012
2:55 pm
Our nation is destined to become a third world county. People care more about their opinions than they do about factual information when making decisions. Our dysfunctional job for life congressmen have placed our country on a death watch. They worry more about being r-elected and making money than they do about working together to come up with the best solution to solve our countries problems.
“When ignorance gets started it knows no bounds”. Will Rogers
C from Marietta
May 2nd, 2012
2:56 pm
People that excel DESERVE to be rewarded. Get over it. There are winners and losers. BTW… no one goes with medical care or goes hungrey.
C from Marietta
May 2nd, 2012
2:56 pm
without medical i meant
C from Marietta
May 2nd, 2012
2:58 pm
@ Georgia, The ” New Mississippi ”
BINGO. You hit the nail on the head. When achievers are the enemy in a sociality. We are in big trouble.
C from Marietta
May 2nd, 2012
3:00 pm
@ One day we will join the rest of the civilized world.
LOL. Is that why people from different nations flock to this country. OR better yet. Get on a raft and risk death to get here. You have it good. If you can’t see that, your blind.
Tiberius - Banned from Bookman's and proud of it!
May 2nd, 2012
3:01 pm
“Spendaholic neocons – from Reagen through geeDub – talking about cutting spending is like hookers talking about cutting prostitution”
Kinda like liberals who can’t get out of a 1980’s mentality and realizing that things actually change.
Unlike liberals who merely devolve.
Tiberius - Banned from Bookman's and proud of it!
May 2nd, 2012
3:02 pm
“Our nation is destined to become a third world county.”
See: Any Democrat-controlled big city for proof.
Jefferson
May 2nd, 2012
3:05 pm
Now you c,c.
HDB
May 2nd, 2012
3:20 pm
Rafe Hollister
May 2nd, 2012
1:09 pm
Edward
Nobody gives a rat’s a** if poor kids starve, can’t get an education, or die outside the ER because the doors are closed to them.
Since when has that happened in the USA?”
Quite recently, Rafe……in St. Louis….
Homeless Woman Dies In St. Louis Jail
AP) – Family members have hired an attorney after a homeless woman from St. Louis who died in a jail cell where she was taken after refusing to leave a hospital.
The last hospital she visited in September was St. Mary’s Health Center.
She yelled from a wheelchair at security personnel and police officers that her legs hurt so badly she couldn’t move.
She was arrested for trespassing and died soon afterward
http://www.ktts.com/news/144189045.html
Towncrier
May 2nd, 2012
3:22 pm
“…there’s no way to spin it as fiscally responsible.”
I am sorry, Kyle….what does that phrase “fiscally responsible” mean? I have not heard it before I don’t think – at least in political stories. Does it mean 16 trillion dollars in debt?
AmVet
May 2nd, 2012
3:25 pm
real john, I’m not sure your reasons are valid, and you’ve provided nothing to substantiate your “scale” claims but at least it is better than the puerile nonsense: “Because we believe in American exceptionalism.”
That drivel would not pass muster in a ninth grade debate class. Seriously.
By way of offering a specific, verifiable example to countermand your claim, I would proffer the example of the VA as a very large scale American universal health care system that works very, very well.
HDB
May 2nd, 2012
3:27 pm
HDB
May 2nd, 2012
3:20 pm
Rafe Hollister
May 2nd, 2012
1:09 pm
Here’s more about a woman DTYING because the ER was CLOSED to her!! It happens moreso than many think!!
Protestors want answers in woman’s jail cell death in Richmond Heights
ST. LOUIS (KMOV.com) — Demonstrators were calling for justice Friday in the case of a homeless woman who died in a Richmond Heights jail cell after being removed from the hospital.
Protestors who held a march on Friday said they are upset at how St. Louis County authorities have handled the investigation.
The demonstration started in Clayton outside the St. Louis County government building on South Central Avenue and ended at St. Mary’s Health Center.
Anna Brown, 29, died in a jail cell in September from blood clots that formed in her leg and migrated to her lungs, hours after Richmond Heights police arrested her for trespassing at St. Mary’s Health Center.
In the week before Brown’s death, she went to three hospitals complaining of leg pain after spraining her ankle.
Brown, who had lost custody of two children, refused to leave the third hospital, St. Mary’s Health Center. She yelled from a wheelchair at security personnel and Richmond Heights police officers that her legs hurt so badly she couldn’t stand. She was arrested for trespassing and wheeled out in handcuffs after a doctor said she was healthy enough to be locked up.
She told officers she couldn’t get out of the police car, so they dragged her by her arms into the station. They left her lying on the concrete floor of a jail cell. Just 15 minutes later, a jail worker found her cold to the touch.
Although officers suspected Brown was using drugs, autopsy results showed she had no drugs in her system.
http://www.kmov.com/news/local/Homeless-womans-jail-cell-death-protested-146430635.html
Tiberius - Banned from Bookman's and proud of it!
May 2nd, 2012
3:28 pm
“By way of offering a specific, verifiable example to countermand your claim, I would proffer the example of the VA as a very large scale American universal health care system that works very, very well.”
Or rather, works well enough for you. And it’s not nearly as large as anything contemplated by universal health care for an entire nation.
getalife
May 2nd, 2012
3:31 pm
The newt is out.
Nice pick kyle.
independent thinker
May 2nd, 2012
3:36 pm
Kyle: Where are these alleged Medicare savings that are being double counted? Are there any that have been created by Obamacare/ How much? How many billions?? And while your looking that important piece of reporting up, also tell us how much was spent by your mentor, George W. on Medicare drugs with no funding source and how much drug companies profited from that government give away. I assume that political ploy to get George W. reelected in 2004 did not effect the deficit in any way but any savings by Obama surely does. My head is hurting from this twisted logic. I guess George W. was better at math than Obama and a deficit under him is a plus not a minus.
AmVet
May 2nd, 2012
3:38 pm
Another example of a very large scale and very successful universal health care system. This one a mere 51 years in existence.
Since 1961 Japan has provided universal health coverage, which allows virtually all access to preventive, curative and rehabilitative services at an affordable cost.
All residents of Japan are required by the law to have health insurance coverage. People without insurance through employers can participate in a national health insurance program administered by local governments. Patients are free to select physicians or facilities of their choice and cannot be denied coverage. Hospitals, by law, must be run as non-profit and be managed by physicians. For-profit corporations are not allowed to own or operate hospitals. Clinics must be owned and operated by physicians.
Medical fees are strictly regulated by the government to keep them affordable. Depending on the family income and the age of insured patients, they are responsible for paying 10%, 20% or 30% of the medical fees, and the government pays the remaining fee.
In 2008, Japan spent about 8.5% of the nation’s GDP (US$2,873 per capita) on health, which ranked 20th among Organization for Economic Co-operation and Development (OECD) countries. It was less than an average of 9.6% across OECD countries in 2009, and about half as much as that in the US.
But we can’t afford it, right?
Tiberius - Banned from Bookman's and proud of it!
May 2nd, 2012
3:42 pm
The ER was closed to her, HDB? Really?
From your own link: “They found that when Brown arrived at St. Mary’s around 11:45 a.m. on Sept. 20, her left ankle was swollen. She was there for about seven hours, during which ultrasounds on both of her legs were negative for blood clots.” And: “Inspectors said she returned eight hours later and was discharged at 7 a.m.”
Some times people die, HDB. They can’t all be saved. When you have ultrasounds on both your legs and they come up negative, there just might be something else wrong with you.
But you’d rather make this about someone who got medical care while claiming they did not.
Lil' Barry Bailout (Revised Downward)
May 2nd, 2012
3:44 pm
independent thinker: tell us how much was spent by your mentor, George W. on Medicare drugs
——–
And while Kyle is doing your research for you why don’t you tell us how much Obozo has reduced spending on Medicare Part D, since it’s such a problem in your mind.
carlosgvv
May 2nd, 2012
3:44 pm
Tiberius – 12:35
So, since this was done in 2010, even though it will cost double what Obama said, Romney and the Republicans won’t bother to bring it up in the all out campaign that is about to start?
And you call me dumb?????
carlosgvv
May 2nd, 2012
3:49 pm
HDB – 3:27
Tiberius and Rafe have already solved this problem to their satisfaction. Their solution is;
Every man for himself and let them eat cake!!!!
Tiberius - Banned from Bookman's and proud of it!
May 2nd, 2012
3:52 pm
“But we can’t afford it, right?”
No, we can’t.
What part of $16+ trillion debts and half our annual budget being deficit spending do you NOT understand?
Misty Fyed
May 2nd, 2012
3:54 pm
The question we need to ask is in the event of a defense emergency, are those other countries AmVet seems so proud of capable of protecting themselves or do they rely on US Military Strength as part of their plan.
It’s not so hard to provide Universal Healthcare when you rely on someone else to bail you out of a jam. Would those same countries be able to afford it otherwise?
Don't Tread
May 2nd, 2012
3:57 pm
“when Obama and Congress pass a law to take in $1, count that $1 twice…”
And if you did that as a private enterprise, they’d throw you in jail. But it’s ok when Democrats do it. Their supporters don’t grasp and/or don’t care about economic concepts (or basic math for that matter). They just want something for nothing, and that’s all that matters to them. If they have to destroy freedom to do it, so be it.
Rafe Hollister
May 2nd, 2012
3:59 pm
HDB
Seven hours in the hospital. She was not refused medical attention, they just could not determine what ailed her. Sad story, but you can’t say that people are dying outside hospitals, when she was treated but obviously misdiagnosed. The same thing could have happened to you or I. How many people have you known that came home after going to the ER, being assured they were fine, and then died shortly thereafter. I joke with my brother a hypochondriac when he feels great after a positive physical. I say people with positive physical exams usually are dead within a few hours.
Anyway, you were the one telling me there was no voter fraud, because you could only find 200 instances of it ever being proved. Well you have a long way to go to find 200 instances of people dying outside hospital ER doors. And this one doesn’t count as she was treated as best they knew how.
AmVet
May 2nd, 2012
4:01 pm
Misty, you foot in mouth specialist, I’ve said for thirty years to pull US troops out of those industrialized countries, and let them defend themselves.
Yes, including Israel.
But your chickenhawk party (primarily) has fought it tooth and nail.
They gotta keep their union buddies at Boeing, Lockheed, Northrup Grumman, Raytheon, General Dynamics, KBR, et al, ad nauseum in the easy money…
Rafe Hollister
May 2nd, 2012
4:04 pm
Every man for himself and let them eat cake!!!!
Carlos
Make mine devils food cake, reminds me of Barry Oblamer or Henry V, as Chris Matthews called him.
independent thinker
May 2nd, 2012
4:05 pm
Little Barry know nothing:
“”"As comptroller general of the Government Accountability Office for most of the past decade, Walker used his position to call attention to the nation’s long-term budget problems at a time when the debt wasn’t front-page news. He now leads the Comeback America Initiative, a nonpartisan group promoting fiscal responsibility. There was no attempt to offset the cost of the Medicare prescription bill, Walker said. “It’s fair to say that at least there was an attempt to pay” for the health law through a mix of spending cuts and tax increases. How big is the hole left by the prescription program? Over the next 75 years, its $7.5 trillion “unfunded obligation” exceeds the $6.7 trillion gap attributable to Social Security. “”"”
Read more: http://www.foxnews.com/politics/2011/09/18/gop-2012-candidates-opposed-to-repealing-unfunded-medicare-drug-benefit/#ixzz1tkEiGM7K
I assume that you would consider Fox news and the Comptoller General reliable sources of information if made a minimal effort to respond with some showing of intelligence.
Misty Fyed
May 2nd, 2012
4:10 pm
AmVet….You speak without knowledge. Their are few things we agree on but minimizing our foot print globally is something we do. You can blame the republicans but I haven’t seen any effort by your party under Obama or Clinton to do this. Oh they have the campaign rhetoric but it is nothing more than that.
Until we do minimize that footprint, it is naive to compare the U.S. model to “other industrialized nations”. You aren’t nearly as smart as you think you are but I know you’re smarter than that.
md
May 2nd, 2012
4:10 pm
“Most think its the extreme austerity measures are causing the problems.”
Another that must believe they saved their way into trouble……..
AmVet
May 2nd, 2012
4:14 pm
…by your party under Obama or Clinton to do this.
How is it that you can open your mouth so wide that you can get both of your feet in there?
I voted against both of them.
Try again, Einsteen…
md
May 2nd, 2012
4:18 pm
“The better question to ask is that out of the 32 industrialized nations in the world, why is the United States the only one without it?”
Because 31 of them piggy back off the US Military and many of them are socialist countries with high income taxes of which EVERYBODY pays??
independent thinker
May 2nd, 2012
4:22 pm
”
“”"The report, The Origins of the Doughnut Hole: Excess Profits on Prescription Drugs, by economist Dean Baker, calculated the difference between the average cost of 20 common drugs used by seniors and the cost when obtained through the Veterans Administration. It found excess profits totaling more than $7 billion in the first year of the program. The study also calculated prices for prescription drugs such as Actonel, Aricept, Celebrex, Fosamax, Nexium, Norvasc, Plavix, Prevacid, Toprol XL, and Xalatan. Thousands of drugs cost more than necessary under the Medicare drug plan because Congress prohibited Medicare from negotiating drug prices directly with the pharmaceutical industry, as is done by the Veterans Administration. In the case of many drugs, the prices paid by insurers participating in the plan are more than twice as high as the prices paid by the Veterans Administration. ”
http://www.cepr.net/index.php/press-releases/press-releases/drug-companies-making-billions-in-excess-profits-under-medicare-plan/
OF COURSE WE SHOULD BE MORE CONCERNED ABOUT OBOZO’S PROGRAM LEADING TO ANY SAVINGS- RIGHT??? Good Job – Georgie boy.
MarkV
May 2nd, 2012
4:35 pm
Kyle’s article today and much of what can only euphemistically be called “discussion” on the blog are examples of the usual game politicians and people like Kyle like to play, blaming “the other side” for legislation gimmicks, pretending that predictions are facts, arguing for political reasons. The one thing that remains on the sidelines is the fundamental issues.
The fundamental facts are that each year a certain number of people in the country are sick, get sick, or injured. Those people should get health care. That costs money. Because nobody knows when and how he/she will get sick or injured, the only sensible way of guaranteeing the health care all people should receive is some form of universal insurance.
The access to health care is a fundamental human right.
It is a government’s duty to guarantee it.
It is not true that the country cannot afford the cost. We are a rich country. Of course we can. It is obvious, however, that every effort should be made to lower the cost. The two fundamental ways are also obvious; To make sickness and injury less likely, and to lower the cost of the necessary care. The former involves such things as encouraging healthier lifestyle, finding more medical weapons against illnesses, making conditions safer. There have been many suggestions from the professionals how to lower the cost.
The system we had before ObamaCare was failing both in providing health care for all and in keeping costs low. ObamaCare is an effort to improve both aspects. As a very complex task it certainly is not perfect and the effort should be to improve it, not to get back to the failed system that preceded it.
md
May 2nd, 2012
4:36 pm
All those on the left that are calling for universal hc, do you not find it strange that even though the numbers indicate that 46% of our society pays no income tax, the talking heads only go after a small percentage too small to make a difference??
http://www.huffingtonpost.com/2011/06/28/46-percent-of-americans-e_n_886293.html
How do you folks ever expect “social” programs to work when half of “society” has no skin in the game??
md
May 2nd, 2012
4:40 pm
“The system we had before ObamaCare was failing both in providing health care for all and in keeping costs low. ObamaCare is an effort to improve both aspects. As a very complex task it certainly is not perfect and the effort should be to improve it, not to get back to the failed system that preceded it.”
Any system based on a third party payer will lead to higher costs…..that includes what we had AND Obamacare. The only way to reduce costs is to find a solution to remove the middle man, thus paying wholesale vs retail for care.
The Fresh Prince of Bill Ayers
May 2nd, 2012
4:41 pm
AmVet
May 2nd, 2012
3:38 pm
Another example of a very large scale and very successful universal health care system. This one a mere 51 years in existence.
Since 1961 Japan has provided universal health coverage, which allows virtually all access to preventive, curative and rehabilitative services at an affordable cost.
Also Japan relies on nuclear power prominently, and place a higher value on education, real education like math and science rather than what the teacher’s unions in this country teach.
The Fresh Prince of Bill Ayers
May 2nd, 2012
4:44 pm
Any system based on a third party payer will lead to higher costs…..that includes what we had AND Obamacare. The only way to reduce costs is to find a solution to remove the middle man, thus paying wholesale vs retail for care.
The best way to reduce healthcare costs is to get lawyers out and malpractice insurance reduced. If you have a life threatening condition and a doctor tries to help, he/she shouldn’t get financially punished if he/she makes a mistake. Doctors are human too.
AmVet
May 2nd, 2012
4:46 pm
The Republcian desperation level to keep the failed and deadly status quo is getting palpable.
First the argument is made that UHC cannot work on a large scale. I’ve given two examples that disprove that. There are many more including Israel’s and Switzerland’s.
Then the reason shifts to military expenditures as the reason that we can’t afford what everyone can.
To which I’ve said, great – drastically cut the Pentagon’s insanely bloated, corrupt, wasteful, abusive and fraudulent budget. Along with the mega-welfare given away to the DoD contractors.
But you national security rubes along with the new Chickenhawk in Chief want no part of that.
So the next canard is how can we afford it when the pitifully poor don’t pay any federal income tax?
Next.
independent thinker
May 2nd, 2012
4:46 pm
How come Kyle forgot to inform his readers that this entire post is based on the partisan opinions of one Blahouse – the Republican appointee to sit as trustee of Medicare and is totally repudiated by other trustees of Medicare? One would think that is an important fact in considering thhe source.
And remember the World Health Organization found the US to be no. 35 of Western countries in proving health care due to inefficiency of our health care system. Maybe taking profits out of health care would make it more efficient? Ya think?
And you expect Romney to do that?
AmVet
May 2nd, 2012
4:51 pm
OH, I see we now have nuclear power and education as the reason we can’t afford UHC.
Speaking of which, do the Japanese public school teachers instruct their students in global cooling and Intelligent Design like you Rick Perry Republicans would just love to have here?
No, they do not.
And once again, you neocons stand completely alone again the rest of the educated world on these matters.
Nobody else agrees with you.
Nobody.
Own it, Because it is the reality
Yet, you’ve figure it all out.
The Fresh Prince of Bill Ayers
May 2nd, 2012
4:52 pm
The access to health care is a fundamental human right.
It is a government’s duty to guarantee it.
MarkV,
Kinda funny, most peoples lives end at around 80 years old. The previous generations paid their doctors out of pocket and accepted death as an inevitable consequence of life. Somehow our society has morphed into a bunch of pu$$ies that go to the doctor at the drop of a hat, many felching on the bill. What Obamacare provides is a way for the responsible to help pay for the irresponsible society members, the people who ride motorcycles with no helmet, adrenilene junkies, smokers, drugs by needles, people who surf on top of cars. It’s ridiculous.