Published April 09, 2012
WASHINGTON – President Obama promised in 2009 that he would not sign a health care plan that “adds one dime to” to federal deficit, but a new study being criticized by the White House says that's exactly what ObamaCare will do.
“I will not sign a plan that adds one dime to our deficits -- either now or in the future,” the president said at a joint session of Congress. “I will not sign it if it adds one dime to the deficit, now or in the future, period.
However, a report released Tuesday by a former Bush administration official and leading conservative economist shows the health care law will add at least $340 billion to the national deficit, a analysis the White House on Tuesday called "faulty" and "partisan."
Federal accounting practices have obscured the true fiscal impact of ObamaCare, said Charles Blahous, who serves as public trustee overseeing Medicare and Social Security finances.
Officially, the health care law is still projected to help reduce government red ink. The Congressional Budget Office, the government's non-partisan fiscal umpire, said in an estimate last year that repealing the law actually would increase deficits by $210 billion from 2012-2021.
However, the CBO has not updated that projection. If $210 billion sounds like a big cushion, it's not. The government has recently been running annual deficits in the $1 trillion range.
"Taken as a whole, the enactment of the (health care law) has substantially worsened a dire federal fiscal outlook," Blahous said in delivering his 52-page analysis at George Mason University's Mercatus Center. "The (law) both increases a federal commitment to health care spending that was already unsustainable under prior law and would exacerbate projected federal deficits relative to prior law."
White House spokesman Jay Carney said the administration does "not agree with the faulty analysis of a Bush administration national economic council member.”
“We would point to the official estimates by the (Congressional Budget Office) as well as the (Office of Budget Management) that state clearly the Affordable Care Act would reduce the deficit over the first 10 years and dramatically over the next 10 years," Carney told reporters aboard Air Force One en route to Florida. “This is obviously a partisan analysis that does not comport with the official presentations. It certainly has not changed (the president’s) opinion and his disagreement with this individual on the need to privatize Social Security, which this individual supports. So, it’s faulty economic analysis.”
Blahous cited a number of factors for his conclusion:
-- The health care's law deficit cushion has been reduced by more than $80 billion because of the administration's decision not to move forward with a new long-term care insurance program that was part of the legislation. The Community Living Assistance Services and Supports program raised money in the short turn, but would have turned into a fiscal drain over the years.
-- The cost of health insurance subsidies for millions of low-income and middle-class uninsured people could turn out to be higher than forecast, particularly if employers scale back their own coverage.
-- Various cost control measures, including a tax on high-end insurance plans that doesn't kick in until 2018, could deliver less than expected.
The decision to use Medicare cuts to finance the expansion of coverage for the uninsured will only make matters worse, Blahous said. The money from the Medicare savings will have been spent, and lawmakers will have to find additional cuts or revenues to forestall that program's insolvency.
Under federal accounting rules, the Medicare cuts are also credited as savings to that program's trust fund. But the CBO and Medicare's own economic estimators already said the government can't spend the same money twice.
On Monday, the White House said Blahous' "new math" calculations are false, and that the health care law will reduce the deficit by billions.
"Claims that the Medicare savings in the ACA have somehow been “double counted” are without merit," Jeanne Lambrew, the Deputy Assistant to the President for Health Policy said in a release, citing the Center on Budget and Policy Priorities. "Deficit-reduction legislation that includes Medicare provisions has been accounted for in exactly the same way in previous Congresses under both political parties."
Lambrew said Blahous' findings fit a "pattern of mischaracterization" about the law, while the facts show the law would reduce the deficit.
Blahous served in the George W. Bush White House from 2001-2009, rising to deputy director of the National Economic Council. He currently is a senior research fellow at the Mercatus Center.
His study was originally cited in The Washington Post Monday.
Sarah Courtney and the Associated Press contributed to this report.