Report: Health Care Law Could Add Trillions to Debt
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In 2009, President Obama pledged, “I will not sign a [health care reform] plan that adds one dime to our deficits -- either now or in the future.”
Just about any budget policy wonk you run into will tell you health care spending is a key driver of federal budget deficits. The Patient Protection and Affordable Care Act (PPACA) was partly sold as a way to get a handle on the ever-increasing budget deficit. But according to a Government Accountability Office (GAO) report, the PPACA could end up increasing the deficit by 0.7% of GDP over 75 years.
National Review’s Andrew Stiles explains:
GAO ran two simulations “based on broad sets of assumptions about health care spending and other components of federal spending and revenue” over a 75-year period. First, a baseline-extended simulation, which “illustrates the long-term outlook assuming federal laws (applicable at the time the simulation was run) remain unchanged,” and second, an alternative simulation, which “illustrates the long-term fiscal outlook assuming historical trends and policy preferences continue.”
The baseline scenario is far more optimistic, largely because it does not take into account the concerns — expressed by the Congressional Budget Office (CBO), the Centers for Medicare & Medicaid Services (CMS) Trustees, and Medicare’s chief actuary — about “whether certain cost-containment mechanisms included in PPACA can be sustained over the long term.”
The alternative scenario, which incorporates the more realistic “alternative projections” suggested by CBO, the CMS trustees, and the chief Medicare actuary, is even more dire. Under this scenario, the “primary deficit” increases by 0.7 percent of GDP over the 75-year period. The GAO does not put a dollar value on that figure, but Senate Budget Committee staff has calculated, and GAO has confirmed, that it would amount to a $6.2 trillion increase in the federal deficit.
In its 59-page report, the GAO said there remain "significant uncertainties" surrounding the law's effect on U.S healthcare spending, which in turn impacts the national deficit.
The "development and deployment of medical technology, future policy decisions, and cost and availability of insurance" all contribute to the state of total healthcare costs, the GAO said.
It’s back to the drawing board. What we need are reforms that expand access, improve quality, and control costs.
[H/t Hot Air]