The nonpartisan Congressional Budget Office (CBO) has found that federal health care reform legislation will make a significant dent in the federal deficit. The CBO estimates that the new law will reduce the federal deficit by $143 billion from 2010 through 2019 and by $1.3 trillion from 2020 through 2029. A recent paper by the Center on Budget and Policy Priorities explains how this occurs, and refutes some arguments being made to the contrary.
The amount of deficit reduction grows over time. CBO finds that the health care reform law will reduce the deficit by much more ($1.3 trillion) in the second decade when the law is fully in effect than in the first decade ($143 billion) as various provisions are implemented. While some have pointed to specific components of the legislation to argue that the new law covers up long-term increases in the deficit by front-loading revenues and back-loading spending, the evidence does not bear this out.
“CBO estimates that by the decade after 2019, the total federal budgetary commitment to health care – the sum of net federal outlays for health programs and tax preferences for health care – will be lower than it would have been if the health care legislation were not enacted,” notes the Center on Budget and Policy Priorities. While the legislation does extended coverage to 32 million of the uninsured and will necessarily increase the level of health care expenditures in the short term, the legislation is still expected to slow down the annual rate of growth in health care and result in lower federal health care spending in the long term.
Projected savings in Medicare savings both reduce the size of the federal budget deficit and extend the life of Medicare’s Hospital Insurance (H.I.) trust fund. The Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) has estimated that the new law will extend the solvency of the H.I. trust fund by ten years. Recognizing both of these realities does not constitute “double counting,” as some have argued.
The CBO’s analysis assumes that all of the law will ultimately be implemented, including both spending and revenue provisions. But if Congress were to make new changes to the law, such as delaying coverage implementation dates or changing the threshold for eligibility of the expanded Medicaid coverage, or repealing revenue or spending provisions, such actions would make the CBO’s cost and deficit reduction estimates obsolete.
- Steve Francisco
