CBO Report Pegs Cost of Obamacare at $1.7 trillion

March 15, 2012
By
Great Beyond /Free Photos

Deep in a report by the nonpartisan Congressional Budget Office is this forecast: “Fewer people are now expected to obtain health insurance coverage from their employer or in insurance exchanges; more are now expected to obtain coverage from Medicaid or CHIP or from nongroup or other sources. More are expected to be uninsured.”

That forecast is tucked away in the March report from the CBO on the latest estimates and forecasts for the Patient Protection and Affordable Care Act, known as “Obamacare” among its detractors, much to the frustration of supporters of President Obama, who pushed through the legislation.

But that, as they say, ain’t all.

Close followers of the debate over health care legislation, such as it was, considering the only committee hearing conducted on the bill was in the Senate, will recall that the administration labored mightily to bring forth a bill that would cost less than a $1 trillion over 10 years.

The report says now that the president’s health-care reform package will actually cost $1.7 trillion over that 10-year-period.

One of the major reasons for the increased estimated cost of Obamacare is the anticipation of a far weaker economy than the Congressional Budget Office had forecast as recently as last year.

In its January outlook, the office said the economic tea leaves suggested that the unemployment rate would remain “higher throughout the projection period than it was in last year’s forecast. CBO also now estimates that wages and salaries will be lower than it previously anticipated.”

That means there will be an increased number of people who are eligible for Medicaid and the health programs for children, known as CHIP programs.

There’s a double whammy in that section of the forecast, too: “More people are now projected to be eligible for Medicaid or CHIP rather than for exchange subsidies, and at the same time, some people whose incomes were expected to be too high for them to be eligible for exchange subsidies are now projected to be eligible for them.”

Health care exchanges were included in the ACA, as the budget office refers to Obamacare, as a sop to states that had the temerity to point to the 10th Amendment and those who question whether there was any constitutional authority for Obamacare in the first place.

The  forecast also notes that there has been a reduction in the  rate of growth in private health-care spending. Private spending grew on average 8.4 percent per year between 2000 and 2005. Since then the average rate of increase has been 5.3 percent per year, until 2010, when the increase grew by a paltry 3.7 percent, according to the report.

The budget office anticipates the trend will continue and forecasts $168 billion in additional Medicaid spending in the 2012-2021 period.

Those upward revisions are attributable in part to higher projected enrollment in those programs, especially for 2014 and 2015.

“The upward revisions also reflect an increase in the projected federal share of costs for people enrolled in the programs under the ACA,” the report says, going on to say, “The higher unemployment and lower wages and salaries in CBO’s latest economic forecast, as compared with those in CBO’s forecast last year, will increase the number of people who will qualify for Medicaid and CHIP as a result of the ACA.

The Congressional Budget Office also suggests that the federal government will save money because preliminary tax data suggests small businesses have been slower to take advantage of tax credits than originally estimated.

Revisions also boost the estimated number of employers who will be required to pay penalties and forecasts that penalties on individuals who do not have health insurance will rise because the number of individuals who will remain uninsured is now estimated to be higher than was estimated a year ago.

The likelihood of increased penalties and higher costs might explain why Rasmussen Reports national polling shows strong suspicion of Obamacare’s touted advantages, with 53 percent of likely voters favoring repeal of the ACA, including 42 percent who strongly favor repeal.

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