Tuesday, January 25, 2011

Will health care repeal increase the deficit?

Doug Holtz-Eakin (former CBO director) exposes the budget gimmicks, deceptive accounting, and implausible assumptions used to create the false impression of fiscal discipline.

  1. Over-counting taxes (ten years) while under-counting subsidies (six years);
  2. CLASS hitched a ride on the ACA for one reason only: premiums are collected in the first ten years, but no benefits are provided.
  3. The deepest spending cuts in the ACA are in Medicare. ... The idea that Medicare could pay less than Medicaid is such sheer folly that Congress will rapidly reverse course.
  4. New Medicare taxes initially apply only to individuals with incomes over $200,000 and couples with incomes above $250,000. But those income thresholds do not rise with inflation, so more and more families will pay them each year.

BOTTOM LINE:  The history of federal entitlements is one of inexorable growth. Once erected, more and more people get added to the programs. The ACA will be no different. Spending will soar, and the tax hikes and spending "offsets" that were cobbled together to get the bill passed will either wither away or vanish altogether.

DISCLAIMER:  I signed the statement for repeal of the law.

UPDATE:  CMS forecasts increased costs:

The landmark legislation probably won't hold costs down, and it won't let everybody keep their current health insurance if they like it, Chief Actuary Richard Foster told the House Budget Committee. His office is responsible for independent long-range cost estimates.

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