With its latest report (PDF) on the budgetary projections of the president’s health care reform law, the nonpartisan Congressional Budget Office (CBO) provides an enhanced view of what Obamacare is likely to cost.
The full spending provisions of the Patient Protection and Affordable Care Act will not come into effect until 2014. So far, the CBO has projected expenditures of the law until 2019. Its most report report covers the period 2012-2021, including an additional two years of full implementation. This still fails to cover the true, ten year cost of the health reform effort but it offers a more realistic overview than has been available so far.
Over eight years, the gross cost of Obamacare’s coverage provisions jumps from $938 billion to nearly $1.4 trillion as a result of a $674 billion expansion of Medicaid, which subsidizes health care costs for the poor, and $677 billion in insurance subsidies for middle class Americans.
Obamacare defenders, including President Barack Obama himself, have claimed that his law cuts the deficit but several of the scheduled tax hikes that would pay for its implementation are unlikely to occur, writes Kathryn Nix of the conservative Heritage Foundation.
One example is the excise tax on “Cadillac” health plans, an unpopular change that isn’t supposed to occur until 2018 — after President Obama is safely out of office. If the Congress and White House responsible for creating this tax weren’t willing to put it into effect, it is unlikely that future lawmakers will do so. Without the Cadillac tax, Obamacare loses $111 billion of offsets for new spending.
Cuts to the Medicare program, which covers health care costs for retirees, are similarly difficult to contemplate. Both the CBO director and Medicare’s chief actuary have warned that the planned cuts to Medicare provider payments could reduce access to care for seniors and reduce quality of care. Congress has been extremely hesitant to allow similar changes to the program in the past. There is no reason to assume that this time will be different.
Fact is that Obamacare only worsens America’s looming entitlement crisis. By the end of this decade, Medicaid, Medicare and Social Security costs are estimated to have risen by a trillion dollars and account for almost half of all federal spending — an utterly unsustainable trajectory unless taxes are significantly raised or deep cuts made to other programs, including defense.