Costly Repeal

.


Health care repeal's cost: $230 billion to deficit

Posted: January 7th, 2011 -- 11:34 AM ET

Add a comment [to AC360º blog]

Charles Riley
CNNMoney Staff Reporter

NEW YORK (CNNMoney) -- It's one of the promises on which House Republicans campaigned: If elected, we will repeal health care reform.

One problem: Rolling back the law would probably increase federal budget deficits by a total of about $230 billion by 2021, according to a preliminary estimate released Thursday by the nonpartisan Congressional Budget Office.

The long-run outlook isn't any better. The CBO warns that long-term projections are highly uncertain, but said a repeal would increase federal deficits in the decade after 2019 by around 0.5% of GDP.

And that's a major problem for Republicans -- who also say they want to reduce the deficit and roll back federal spending to 2008 levels.

However, it's not a complete shock that the CBO's estimate predicts a debt increase if Republicans succeed in repealing the law. After all, the original legislation was predicted to lower the deficit, a key selling point for Democrats.

The estimated long-term deficit reduction power of the reform law comes mainly from new tax revenue, and savings from health programs like Medicare.

Taking on health care reform: According to the CBO, repealing the law would eliminate those savings, and the agency said it stands by its original estimate that the law could reduce the deficit by $143 billion over the first 10 years.

Republicans have long argued that the health care overhaul -- widely considered President Obama's signature domestic accomplishment -- will hamper the country's long-term economic growth.

The official title of the bill designed to repeal the law reflects the GOP position. It's called: "H.R. 2, the Repealing the Job-Killing Health Care Law Act."

"We made a commitment to the American people," House Speaker John Boehner said Thursday. "We are listening to the American people. They want this bill repealed, and we are going to repeal it."

Republicans made a move Wednesday that suggested they knew the CBO's estimate would not play in their favor. They exempted their plan to kill the law from rules that say legislation can't add to the deficit.

Democrats immediately pounced on the CBO report, arguing, among other things, that it undermines the new GOP House majority's emphasis on fiscal responsibility.

"Not only would repeal of health care reform add to our deficit, it would dump more than 30 million Americans from coverage who will be protected by our new health care reform act," said Sen. Dick Durbin, a Democrat from Illinois.

Boehner shot back -- arguing that the CBO is entitled to its own opinion.


"I don't think anybody in this town believes that repealing Obamacare is going to add to the deficit," Boehner said.

Boehner spokesman Michael Steel doubled down on the talking point, arguing that fuzzy math and tricky accounting skews the CBO estimate.

"That's why we pledged to repeal it, and replace it with common-sense reforms that will actually work," Steel said in a statement.

Douglas Holtz-Eakin, a leading Republican economist and former director of the CBO, said the agency's estimate is "riddled with budgetary gimmicks" that result in a "completely misleading description of its budgetary impacts."

It's not the CBO's fault, Holtz-Eakin said, explaining that by law, the agency must take the information Congress sends to them -- however implausible -- at face value.

The costs associated with implementing the law and paying Medicare doctors are two important factors Holtz-Eakin said the CBO was unable to consider when studying the legislation.

While the GOP-controlled House is considered likely to pass a repeal of the health care overhaul, most political analysts believe it has little chance of clearing the Senate or surviving a presidential veto.

-- CNN's Alan Silverleib contributed to this report.