Tag: "CBO"

Obamacare’s Shrinking Costs Should Bring Tax Cuts

debtThe Congressional Budget Office’s March budget baseline updates its estimates of costs and insurance coverage due to Obamacare. The March baseline estimates that the gross cost of Obamacare’s subsidies and Medicaid spending for the years 2016 through 2025 will be $1.7 trillion, $286 billion less than it had estimated in the January baseline.

The CBO calculates a so-called “net cost” by subtracting revenues from businesses and individuals paying the mandate/fine/penalty/tax for not buying Obamacare, the “Cadillac tax” on high-cost health cost insurance, and the effect of changes in taxable compensation. This net cost has shrunk by $142 billion to $1,207 billion.

Even more impressive are the reductions in the cost of Obamacare from the CBO’s original March 2010 score of Obamacare. The two estimates overlap for the seven years, 2015 through 2021. The original estimate was that Obamacare’s gross cost would be $1.4 trillion over the period, and the net cost $1 trillion. These have shrunk to $992 billion and $751 billion, reductions of 28 percent and 29 percent.

When the CBO issues a new baseline, it updates its estimate of Obamacare’s insurance provisions. What it does not do is update its estimate of revenues from the host of other taxes in the Affordable Care Act, such as the medical-device excise tax.

So, it is not immediately obvious that Obamacare’s shrinking cost estimates should open the door to cutting some of those harmful taxes – which they should.

4 to 7 Million Will Be Fined under ObamaCare’s Individual Mandate

From the Congressional Budget Office and the Joint Committee on Taxation:

CBO and JCT estimate that 23 million uninsured people in 2016 will qualify for one or more of those exemptions. Of the remaining 7 million uninsured people, CBO and JCT estimate that some will be granted exemptions from the penalty because of hardship or for other reasons.

All told, CBO and JCT estimate that about 4 million people will pay a penalty because they are uninsured in 2016 (a figure that includes uninsured dependents who have the penalty paid on their behalf). An estimated $4 billion will be collected from those who are uninsured in 2016, and, on average, an estimated $5 billion will be collected per year over the 2017–2024 period.

(CBO, Payments of Penalties for Being Uninsured Under the Affordable Care Act: 2014 Update)

Headlines I Wish I Hadn’t Seen

So This is What a Ponzi Scheme Looks Like

The unfunded liability in Medicare, the trustees tell us, is $34 trillion over the next 75 years. Looking indefinitely into the future, the unfunded liability is $43 trillion — almost three times the size of today’s economy. Based on more plausible assumptions, such as those reflected in the “alternative” scenario for Medicare produced by the Congressional Budget Office in June 2012, the long-term shortfall is more than $100 trillion.

From an editorial by Larry Kotlikoff and me in the Wall Street Journal today.

Conservatives Debate Exchanges

Douglas Holtz-Eakin, former director of the Congressional Budget Office and chief domestic policy adviser to John McCain’s presidential campaign, created quite a stir last week when he urged states to set up their own health insurance exchanges under ObamaCare. This is from The Hill:

The healthcare law envisions each state setting up its own exchange — a sort of Expedia or Orbitz for health insurance — but authorizes a federally run fallback in states that don’t act on their own…But Republican governors have rejected state-based exchanges, saying they won’t play any part in helping to implement a law they oppose.

Operating a state-based exchange gives the states the power to make key decisions about their marketplace, such as whether to negotiate directly with insurance plans or open the market up to any plan that meets certain minimum criteria. States could also decide whether to preserve or eliminate the individual market outside of their exchanges, or require non-exchange plans to meet the same criteria as exchange plans.

Punting those decisions to the federal government is “choosing a slippery slope toward precisely what liberal Democrats want: a federally controlled healthcare system that would be the first step toward European-style, single-payer healthcare,” Holtz-Eakin wrote.

Holz-Eakin’s NRO piece. Jim Capretta and Yuval Levin give the other side. My debate with Linda Gorman on this issue.

The Obama Recession

This graph is from a new study from the Congressional Budget Office:

Here is Neil Irwin at the Ezra Klein blog:

This economic recovery has been a big disappointment relative to what the United States has usually experienced after a recession. Growth has been 9 percent below what was seen in past recoveries on average in its first three years…The new CBO report claims that two-thirds of the underperformance of the economy over the past three years compared to a typical recovery is due to a slower rate of growth in potential GDP. Only one-third, in this analysis, is due to factors related to this recession.

Cost for ObamaCare Soar

When the [Affordable Care Act] passed in June 2010, the Congressional Budget Office projected the budget cost between fiscal 2012 and fiscal 2019 to be $462 billion. By June 2012, the cost for these same years had jumped to $574 billion, an increase of nearly 25 percent.

Entire report from the American Action Network.

The Demonstration Projects Are Not Working

  • A paper in Health Affairs (subscription required) released last week found that even “aggressive” improvements in performance measures by accountable care organizations caring for diabetic patients would result in minimal cost savings — and “after the costs of performance improvement, such as additional tests or visits, are accounted for,” those minimal cost savings could become cost increases.
  • A recent analysis of North Carolina’s patient-centered medical home initiative found the program yielded no budgetary savings, contrary to expectations.
  • More broadly, the Congressional Budget Office noted earlier this year in a major report that most Medicare demonstration programs over the past several decades have NOT saved money.

Source: Chris Jacobs.

Tim Kane Critiques the Obama Presidency

Here is the scorecard on Obama’s fiscal promises, according to the CBO: the deficit in 2008 was 0.5 trillion dollars. Federal outlays were 2.98 trillion dollars. Since then, the U.S. government has run deficits of 1.4, 1.3, 1.3, and a projected 1.17 trillion dollars during these last four years…with outlays of 3.5, 3.5, 3.6 and a projected 3.4 trillion dollars (through 11 months of the 2012 fiscal year)…

Instead of cutting the deficit in half, Obama has tripled it. Instead of controlling spending, he’s raised outlays by half a trillion dollars a year, which will get much bigger when the health care law takes effect. Instead of a temporary stimulus to bridge the nation back to full GDP, we have a permanently stimulated federal government and zero recovery.

It is entirely understandable that the deficit was not fixed in the first year that Obama was in the White House, the second year, the third year, and even the fourth year. What is not understandable is the absence of any coherent long-term plan, partisan or bi-partisan, to address the issue. What America got instead was another blue-ribbon commission (Simpson-Bowles) that was ignored before the ink on its final report was dry.

Entire post by Tim Kane in the Balance blog.

ACA Effects on Seniors: Costs Exceed Benefits by 15 to 1

[A]ccording to the Congressional Budget Office, for every $500 the law spends on preventive services and prescription drugs, it cuts the rest of Medicare by $7,385. That’s a cut-to-spending ratio of nearly 15 to 1.


Sources: Avik Roy, CBO.