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Budget office: Obama's health law reduces deficit

 

President Barack Obama's health care overhaul will reduce rather than increase the nation's huge federal deficits over the next decade, Congress' nonpartisan budget scorekeepers said Tuesday, supporting Obama's contention in a major election-year dispute with Republicans.

Republicans have insisted that "Obamacare" will actually raise deficits -- by "trillions," according to presidential candidate Mitt Romney. But that's not so, the Congressional Budget Office said.

The CBO gave no updated estimate for deficit reductions from the law, approved by Congress and signed by Obama in 2010. But it did estimate that Republican legislation to repeal the overhaul -- passed recently by the House -- would itself increase the deficit by $109 billion from 2013 to 2022.

"Repealing the (health care law) will lead to an increase in budget deficits over the coming decade, though a smaller one than previously reported," budget office director Douglas Elmendorf said in a letter to House Speaker John Boehner, R-Ohio.

Tuesday's budget projections were the first since the Supreme Court upheld most of the law last month. The CBO said the law's mix of spending cuts and tax increases would more than offset new spending to cover uninsured people.

As expected, the budget office said the law will cover fewer uninsured people because the Supreme Court ruled that states won't have to sign on to a planned expansion of Medicaid for their low-income residents.

Thirty million uninsured people will be covered by 2022, or about 3 million fewer than projected this spring before the court ruling, the report said.

As a result, taxpayers will save about $84 billion from 2012 to 2022. That brings the total cost of expanding coverage down to $1.2 trillion, from about $1.3 trillion in the previous estimate.

Democrats immediately hailed the findings as vindication for the president. "This confirms what we've been saying all along: the Affordable Care Act saves lots of money," said Senate Majority Leader Harry Reid, D-Nev.

Republicans said they remain unswervingly committed to repealing what they dismiss as "Obamacare." When combined with other budget-cutting measures, GOP leaders say that repeal will ultimately reduce deficits. Mitt Romney says if elected he will begin to dismantle the law his first day in office.

Medicaid has been one big question hanging over the future of Obama's law since the Supreme Court ruled.

Some GOP-led states, such as Texas and Florida, say they will not go forward with the expansion. Others are uncommitted, awaiting the voters' verdict on Obama in November.

Although the federal government would bear all of the initial cost of that expansion, many states would have to open their Medicaid programs to low-income childless adults for the first time.

CBO analysts did not try to predict which specific states would jump in and which would turn down the Medicaid expansion. Instead, they assumed that many states would eventually cut deals with the federal government to expand their programs to some degree.

As a result, the budget office estimates that more than 80 percent of the low-income uninsured people eligible under the law live in states that partially or fully expand their programs.

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