Medicare Trustee: Obamacare Will Increase Spending by Over $1 Trillion, Add $530 Billion in Deficits

By Edwin Mora | April 10, 2012 | 5:36pm EDT

President Barack Obama speaks at the White House Forum on Women and the Economy, Friday, April 6, 2012, in the South Court Auditorium of the Eisenhower Executive Office Building on the White House complex in Washington. (AP Photo/Carolyn Kaster)

( - President Obama’s health care legislation, contrary to promises made by proponents, will add up to $530 billion to federal deficits and boost government spending by at least $1.15 trillion over the next decade, according to a report authored by the GOP trustee for Medicare and Social Security on behalf of the Mercatus Center.

On April 9, the White House rejected the report by Charles Blahous, a research fellow at George Mason University’s Mercatus Center who was approved by Obama as the Republican trustee for Medicare and Social Security in 2010.

“The Affordable Care Act (ACA) enacted in 2010 will significantly worsen the federal government’s fiscal position relative to previous law,” wrote Blahous in a new Mercatus Center report highlighting the fiscal ramifications of Obamacare. “Over the years 2012–21, the ACA is expected to add at least $340 billion and as much as $530 billion to federal deficits while increasing federal spending by more than $1.15 trillion over the same period and by increasing amounts thereafter.

“These adverse fiscal effects are not everywhere understood because of widely circulated analyses referencing scoring conventions of the Congressional Budget Office (CBO) and the Medicare Trustees, which compare the health care reform legislation to a baseline scenario that differs from actual law,” explained Blahous. “Moreover, there is substantial risk that the ACA’s cost saving provisions will not be enforced as currently specified.

“To avoid worsening the federal fiscal outlook, legislative corrections are required before the ACA’s provisions become fully effective in 2014. Roughly two-thirds of the law’s subsidies for health insurance exchanges must be eliminated to avoid worsening federal deficits and the entirety of their costs eliminated to avoid further increasing federal health care financing commitments,” he added.

In a video, Blahous explained that the fiscal crisis generated by Obamacare, formally known as The Affordable Care Act, is fueled by a gimmick contained in the law that involves double-counting of funding.

The non-partisan CBO and Medicare Actuary Richard Foster have also highlighted the double-counting trick in the past.

“In practice, the improved [trust fund] financing cannot be simultaneously used to finance other federal outlays (such as the coverage expansions) and to extend the trust fund, despite the appearance of this result from” the usual budget rules, testified Foster before lawmakers on March 30, 2011.

In 2010, the CBO noted that without Medicare savings, instead of decreasing the deficit, the law would actually boost it up by $226 billion through 2019. 

Nevertheless, the White House accused Blahous of making erroneous claims about the fiscal ramifications of the health care law.

“One former Bush Administration official is wrongly claiming that some of the savings in the Affordable Care Act are ‘double-counted’ and that the law actually increases the deficit,” Jeanne Lambrew, Obama’s deputy assistant for health care policy, stated on an April 9 post on the White House blog.

“This new math fits the old pattern of mischaracterizations about the Affordable Care Act when official estimates show the health care law reduces the deficit,” she added.

Also in a blog post, House Speaker John Boehner (R-Ohio) wrote that the Blahous report reinforces the GOP case for repealing the health care law.

“While President Obama is out touting a political tax hike (yet again), new evidence is bolstering Republicans’ case for fully repealing the president’s health care law,” wrote Boehner in reference to Blahous’ report. 

“So not only is ObamaCare making it harder for small businesses to hire new workers, jeopardizing families’ coverage, and threatening seniors’ access to health care. It’s also, as suspected, adding to a debt that is already unsustainable and threatening long-term economic growth,” he added.

In February 2011, the CBO projected that repealing Obamacare will boost deficits by $210 billion over the same 2012-2021 period covered by Mercatus report.

The $210 billion in deficits created by repealing the law is dwarfed by the $530 billion in deficits that Blahous said would be generated if the law is kept in place.

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