By Robert Romano -
Even if some of the most conservative estimates of participation in ObamaCare prove to be correct in the next 15 years, the legislation will still mean expenditures of about $102.8 billion every year once fully implemented, or about $1 trillion over ten years.
Why? Because, as supporters claim, the program will offer health coverage to about 32 million new people. 15.9 million new enrollees in Medicaid by 2019, as estimated by Kaiser Family Foundation, at an average federal cost of $4,950 per individual, and which leaves another 16.1 million who would receive taxpayer-subsidized private insurance at let’s say an average cost of $1,500 per individual.
So, that’s $78.7 billion extra for Medicaid every year thereafter and $24.1 billion for the insurance subsidies, or $102.8 billion every year. If one factors the $26.4 billion annual revenue projected by CBO through 2020 from excise taxes on higher-premium insurance plans and other changes, it still leaves an unfunded obligation of about $76.4 billion a year, or $764 billion over ten years when the program is into its full implementation.
It will most certainly cost more than that, because more than 32 million people will ultimately receive coverage. And the amount per individual will also increase annually as the costs of health care increase incrementally. Last week, we calculated that it could cost more than $2 trillion over ten years once fully implemented. Senate Republicans have said it would cost $2.5 trillion.
Even the CBO estimated that, starting in 2019, Medicaid and CHIP expansions will cost $86 billion and the insurance subsidies would cost $111 billion every year thereafter. That’s $197 billion every year going forward, or a $2 trillion ten-year price tag. But it would be even more than that. By 2030, these expanded coverage schemes will easily cost $350 billion annually, or ten percent of the current budget.
It is partially in this context, then, that the bizarre claims by the Congressional Budget Office and the Obama Administration that repealing ObamaCare would somehow “cost” $230 billion must be analyzed. How can not increasing the taxpayer-financed health care rolls cost anything?
CBO says that through 2019, the health care expansion would have cost $780 billion, but that would have been offset by cutting Medicare by $500 billion under the assumption that waste, fraud and abuse were eliminated.
It’s hard to figure what to make out of that. Either, a thousand-page piece of legislation, and not prudent enforcement of laws already in existence is what is required to eliminate Medicare fraud. Or, the CBO was guaranteeing that Medicare fraud would be prevented to the tune of $50 billion a year. Which, after a year of being implemented, we’re still awaiting the headline of prosecutions totaling $50 billion in restitution being paid back to the program. The most one can see is an article from Time stating that the Obama Administration is spending $1.7 billion to find Medicare fraud.
The most likely explanation is that CBO is saying that Medicare was going to be cut regardless of whether “waste, fraud, and abuse” was ever found. Else, how could they score it? That would put the lie to Barack Obama’s claim at a joint session of Congress when he said on September 9th, 2009, “The only thing this plan would eliminate is the hundreds of billions of dollars in waste and fraud”. Of course, the mechanism for the reduction of Medicare spending was the arbitrary entity, the Independent Payments Advisory Panel (i.e. the death panel).
Leaving that aside, CBO also says $410 billion of excise taxes, penalties, and an increase in Medicare payroll taxes would not be collected. Also, $500 billion of scheduled cuts to Medicare would not take place. So, $910 billion minus a net cost of $780 billion, according to CBO, and then we’re at $130 billion “added” to the deficit through 2019.
Then, CBO added another two years to the estimate through 2021 (even though their original estimate only went through 2019), saying another $80 to $90 billion would be added to the deficit. And presto! Repealing ObamaCare, says CBO, would “cost” $230 billion.
House Budget Committee Chairman Paul Ryan says the CBO is wrong. “Misleading arguments about its true deficit impact exclude the $115 billion needed to implement the law and over $500 billion in double-counting Social Security payroll taxes, CLASS Act premiums, and Medicare reductions,” he said in a statement. The CBO analysis also did not include so-called “doc-fix,” a cut in Medicare payments to physicians.
House Republicans have released a report documenting the real costs of ObamaCare at $2.6 trillion upon full implementation and $701 billion in new debt in its first ten years alone. “The law was written to measure 10 years of tax increases to offset 6 years of new spending. There is no question that the creation of a trillion-dollar open-ended entitlement is a fiscal train wreck,” Ryan said. Which is why it must be repealed.
Robert Romano is the Senior Editor of Americans for Limited Government.