Fox News and The Washington Post are both saying that ObamaCare will cost double what was originally planned. Here is an explanation why this isn't the case. No, Obamacare's Cost Didn't Just Double. Sigh.
Sorting through the deceptive attacks on health care reform gets old, even for me. But on Wednesday the Republicans and their allies made a claim so obviously misleading that they, and the media outlets parroting them, must have known they spreading false information.
The basis for the claim is the Congressional Budget Office’s latest projections for the Affordable Care Act, which critics (and I!) like to call Obamacare. When Congress first passed the law, in the spring of 2010, CBO made official estimates of how much the law would cost, how many people would get insurance as a result, and so on. It updated that estimate one year later and has, now, updated it one more time.
The CBO distributed its report in the morning and, by 11 a.m., Republican offices on Capitol Hill were spitting out press releases about it. According to the Republicans, CBO had discovered that Obamacare was going to cost $1.76 trillion over the next ten years. “The CBO’s revised cost estimate indicates that this massive government intrusion into America’s health care system will be far more costly than was originally claimed,” Tom Price, chairman of the House Republican Policy Committee, said. Within a few hours, both Fox News and the Washington Times were carrying online stories making the same claim. According to the Fox News account, CBO was “showing that the bill is substantially more expensive – twice as much as the original $900 billion price tag.”[at]
If CBO had truly determined that health care reform’s cost will be twice the original estimates, it would be huge news. But CBO said nothing of the sort.
To figure out the cost of health care reform, CBO looks at each of the law’s component parts and, for accounting purposes, groups them into different categories. It calls one category “gross cost of coverage expansions” – that’s the amount of money the federal government will spend to help people get insurance, mostly by offering Medicaid to more people or giving people subsidies they can use to help offset the cost of private insurance. Last year, CBO estimated that the gross cost of coverage expansion from 2012 through 2021 would be $1.445 trillion. Now CBO thinks the gross cost will be $1.496 trillion. The number shifted, in part, because the CBO has changed its projections for economic growth. (MSNBC's Tom Curry has a nice explanation of this.)[at]But, in the context of such a large a budget projection, that’s barely any difference at all.
In the this latest estimate, CBO extends its projection out one more year, to capture the expenses from 2012 to 2022, in order to capture a full decade. In 2022, CBO says, the gross cost of coverage expansion will be $265 billion. Add that to the $1.496 and you get (with rounding) the $1.76 trillion – the one in the press releases and the Fox story.
But there is nothing new or surprising about this. It’s only slightly more money than the previous year’s outlays. The ten-year number seems to jump only because the time frame for the estimate has moved, dropping one year, 2011, and adding another, 2022. Obamacare has virtually no outlays in 2011, because the Medicaid expansion and subsidies don’t start up until 2014, which means the shifting time frame drops a year of no implementation and adds one of full implementation.
Still, doesn’t that just validate what the law’s critics have always said, that the administration was playing games to hide the program’s true impact on the deficit? Hardly. Remember, this is just the raw cost of expanding insurance coverage we’re talking about here – in other words, the money the federal government is sending out the door. The new law also calls for new revenue, in the form of taxes and penalties. It also reduces spending, mostly through Medicare, to help offset the cost of the coverage expansion. When the Affordable Care Act became law, CBO estimated that the net result of all these changes, taken together, would be to reduce the deficit. Now, with this revised estimate, CBO has decided the law will reduce the deficit by even more money. Yes, you read that right: The real news of the CBO estimate is that, according to its models, health care reform is going to save even more taxpayer dollars than previously thought. http://www.tnr.com/blog/jonathan-coh...uble-price-fox