I wrote a few weeks ago about the hidden economic damage of Obamacare, particularly the harm to the job market.
Today, let’s get further depressed by looking at the ever-worsening fiscal damage of the law.
Here’s some of what Chuck Blahous of Mercatus wrote about this costly new entitlement.
The ACA was enacted in 2010 with the promise of reducing the federal budget deficit while expanding health insurance coverage. Nearly lost amid the recent press cheerleading over ACA enrollment figures is that this promise has disintegrated, and now no one…can say how much fiscal damage the ACA will ultimately cause. …CBO currently estimates that the ACA’s coverage provisions will cost the federal government $92 billion a year by FY2015. This is roughly 0.5 percent of projected U.S. economic output for 2015, well exceeding the relative costs of Social Security and Medicaid at similar points in their histories. (The amount falls just short of the proportion of GDP absorbed by all of early Medicare.) Worse, the federal fiscal position was far weaker when the ACA was passed than when Social Security, Medicare, and Medicaid were created.
That’s bad news, but things will get even worse in coming years.
Troubling though the ACA’s startup costs are, they represent only the tip of the fiscal iceberg that will be the fully phased-in law. CBO projects that its annual costs will hit $200 billion by FY2020, or nearly 0.9 percent of GDP. Yet this assumes that lawmakers will be content to allow the ACA’s health insurance subsidies to grow more slowly than low-income beneficiaries’ health care costs, as the law now stipulates. Thus there is every reason to believe that the ACA’s eventual costs will far exceed initial estimates, as happened with Social Security, Medicare, and Medicaid. …Also unclear is whether the ACA’s reinsurance and “risk corridor” provisions will produce unexpected federal budget costs; these provisions were included in the ACA to protect insurers… the Obama administration continues to promise both participating health insurers and taxpayers that they will each be protected from loss under the risk corridor provisions.
The potential bailout for insurance companies is bad news for taxpayers, but it’seven more upsetting for moral and practical reasons.
The big insurance companies got into bed with the White House, figuring it was a good idea for the federal government to coerce Americans into buying their product. As far as I’m concerned, they should swallow heavy losses.
But in Washington, there’s rarely a downside for doing the wrong thing. Instead, this could be like TARP. A reward for bad behavior.
By the way, it’s not just policy wonks who are concerned about the fiscal burden of Obamacare. According to Roll Call, the Congressional Budget Office has – for all intents and purposes – given up trying to estimate the fiscal burden of the legislation.
For Democratic lawmakers who were hesitant to sign onto the sweeping 2010 health care law, one of the most powerful selling points was that the Affordable Care Act would actually reduce the federal budget deficit…the answer to that question has become something of a mystery. In its latest report on the law, the Congressional Budget Office said it is no longer possible to assess the overall fiscal impact of the law. That conclusion came as a surprise to some fiscal experts in Washington and is drawing concern. …In a little-noticed footnote to a report issued in April, “Updated Estimates of the Effects of the Insurance Coverage Provisions of the Affordable Care Act,” the CBO wrote that it and the Joint Committee on Taxation “can no longer determine exactly how the provisions of the ACA that are not related to the expansion of health insurance coverage have affected their projections of direct spending and revenues.”
Translated into plain English, Obamacare is a budgetary black hole.
If only somebody could have predicted that this would happen. But actually, many people did. The history of entitlement programs is that they are bad news in theory and even worse news in reality.
Indeed, even I warned that Obamacare was going to be a bigger fiscal nightmare than originally predicted, as seen in this video.
