Published May 23, 2011
Any time Congress passes a massive, partisan “reform” bill – promising Americans troves of goodies while simultaneously claiming to reduce the deficit – taxpayers better drink a double dose of caution. The Patient Protection and Affordable Care Act (aka Obamacare) should cause us to chug a big gulp of just that.
Despite its feel-good name, the new health law is a balloon loan for America – it looks attractive in the early years, but then the hidden spending, budget gimmicks and unintended consequences kick in. There are numerous reasons to repeal this measure, but ultimately it boils down to this simple truth: we just can’t afford it.
Here’s just one recent example. Last month, the House passed a bill I introduced – H.R. 1213 – eliminating a section of the new healthcare law that provides the Secretary of Health and Human Services with an open-ended amount of money to hand out grants for state-based health exchanges.
“Exchange” is the buzzword for the new law’s marketplace of federally subsidized insurance products.
But since private companies would sell these policies – and they already have their own marketing and sales budgets – it’s not clear why the Secretary needed this unlimited tap on taxpayer money.
Was it a backdoor way to spend even more on subsidies? Or maybe it’s a slush fund to promote the White House’s favorites in the insurance industry? No one knows. But as long as the healthcare train was moving, why not add some more boxcars of cash?
My bill cuts this funding and reclaims it for the American taxpayer.
It seems a simple proposition. Yet a closer look deepens the mystery. The day before the House considered my legislation, the Congressional Budget Office (CBO) provided a new estimate of how much this provision would cost taxpayers. It revealed an even more troubling example of the “sign up now, pay later” nature of Obamacare and its policy implications for employer-based coverage.
When Congress passed the new healthcare law last year, CBO forecast that $2 billion in exchange grants would be provided to states. But at my request, CBO took another look last month.
Guess what? Now CBO says eliminating the grants will save taxpayers $14.6 billion over the next 10 years. The Congressional Research Service confirmed to me that the Secretary can actually spend as much as she wants to, with no limit. It raises a more fundamental question: Where else will Obamacare cost more than advertised?
For starters, we know the original CBO estimate increased from $938 billion for FY2010-FY2019 to $1.45 trillion when the latest 10-year estimate was released (FY2012-FY2021). In other words, about a 50 percent increase in cost in two years. This is because primary spending in the bill doesn’t kick in until 2014, so the updated CBO numbers include two more years of the “real” cost. One can only imagine the cost when a full ten years worth of spending is calculated.
The estimate of H.R. 1213 also demonstrates the unintended effects of ObamaCare on employer-based insurance.
According to CBO, the federal government will save billions in taxpayer money because, without these grants to states, more people will retain their private insurance coverage, meaning fewer will get dumped in to the federally subsidized exchanges.
This is just one example of how the new health care law encourages more – not less – federal spending. By providing strong incentives for businesses to drop coverage and send their employees to federally subsidized insurance exchanges, ObamaCare will continue to bust the budget. The multi-billion dollar re-estimate I discovered is just the beginning.
The new health care law promises to place even more strain on an already stretched entitlement system. It’s ironic that at the same time budget negotiators in Washington are struggling with how to rein in future federal spending, ObamaCare intends to pay out nearly one and a half trillion more over the next ten years in subsidies for insurance exchanges and Medicaid expansions. None of these changes have kicked in yet, but they will only add to our debt woes in the years ahead.
The 2008 financial crisis occurred because people took on debt they couldn’t afford – houses, credit cards and automobiles. The deleveraging over the past three years has been painful and costly. And the new health law repeats a pattern of bad behavior. Rather than fixing the problem, ObamaCare perpetuates our balloon loan culture that created the credit crisis, extending it to the healthcare and entitlement world.
The exchange grants the House recently eliminated are just one example – the more we uncover, the more Americans realize ObamaCare needs to be repealed and replaced.
Republican Congressman Fred Upton represents Michigan's Sixth District.