Re­peal­ing ACA would avoid fis­cal catas­tro­phe

Modern Healthcare - - Front Page - By Dou­glas Holtz-Eakin

Re­peal­ing the ACA would avert catas­tro­phe

The health­care over­haul law is bad medicine and bad eco­nomic pol­icy. The Pa­tient Pro­tec­tion and Af­ford­able Care Act was sold to the Amer­i­can peo­ple un­der the il­lu­sion of deficit re­duc­tion, but when you strip away the bud­getary gim­micks, the health­care re­form law com­mits the coun­try to long-term red ink.

In op­pos­ing re­peal, Af­ford­able Care Act ad­vo­cates of­ten cite the Con­gres­sional Bud­get Of­fice pro­jec­tion that re­peal­ing the law would in­crease the deficit by $230 bil­lion over the com­ing decade and by a mod­est amount in the sub­se­quent decade. A closer ex­am­i­na­tion of CBO’s work and other ev­i­dence leads to the ex­act op­po­site con­clu­sion. Re­peal is the first step to­ward restor­ing fis­cal san­ity.

The ACA is fis­cally dan­ger­ous at a moment when the U.S. is al­ready fac­ing a sea of red ink. It cre­ates two mas­sive new en­ti­tle­ment pro­grams at a time when the bud­get is al­ready buck­ling un­der the weight of ex­ist­ing en­ti­tle­ments. At a min­i­mum, it will add $1 tril­lion to govern­ment spend­ing over the next decade. As­ser­tions that these costs are paid for are based on omit­ted costs, shifted premi­ums from other en­ti­tle­ments and un­sus­tain­able spend­ing cuts and rev­enue in­creases. As Michael Ram­let and I showed in Health Af­fairs, a more com­pre­hen­sive and re­al­is­tic bud­get pro­jec­tion sug­gests that the ACA could po­ten­tially raise the fed­eral bud­get deficit by more than $500 bil­lion dur­ing the first 10 years and by nearly $1.5 tril­lion in the fol­low­ing decade.

Ap­ply­ing the same eval­u­a­tion meth­ods to score a straight re­peal of the ACA again re­quires ac­count­ing for the same bud­get gim­micks used by the law’s framers to ma­nip­u­late the CBO’s es­ti­mate. When these mea­sures are stripped, a dif­fer­ent pic­ture emerges: Re­peal would lower, not raise, the fed­eral deficit by $279.7 bil­lion in the first 10 years.

The du­bi­ous bud­getary pro­vi­sions that im­pact the bud­get es­ti­mate of re­peal fall into three cat­e­gories: un­achiev­able sav­ings, un­col­lectible rev­enue and al­ready-re­served premi­ums.

Un­achiev­able sav­ings: The first cat­e­gory re­moves spend­ing cuts that we be­lieve the CMS will ul­ti­mately be un­able to im­ple­ment. These

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