Will the Affordable Care Act (ACA) actually add to the deficit in the coming years?
Congressional Republicans, according to a recent Forbes op-ed piece, are now asserting the ACA will add $131 billion to the federal deficit over the next decade, negating promises made by President Barack Obama.
The group claims to be using the same scoring methodology as the Congressional Budget Office, which had concluded the 2010 healthcare reform law will help reduce the deficit. The CBO recently reported that cost controls in the ACA would curb healthcare spending growth.
Republicans sitting on the Senate Budget Committee said the CBO report has failed to take into account "a botched rollout of the insurance exchanges; unilateral changes made by the [Obama] administration to exempt certain groups from complying with key aspects of the law; technical adjustments to CBO's baseline projections for federal health spending; updated economic forecasts; a better understanding of the labor market effects of the legislation; and a new 10-year budget window."
The Budget Committee Republicans arrived at that conclusion by making significant changes in the equations the CBO used to arrive at its figure. That included its conclusion that 2.5 million full-time workers will exit the U.S. labor force as a result of the law, leading to a net revenue loss of $280 billion in tax receipts between 2017 and 2024.
However, the committee overlooked some of the recent CBO data. The agency noted on page 111 of its 2014-24 Economic Outlook report that as many as 7 million Americans will forego employer-based health insurance coverage over the next decade as a result of the ACA. And because of that choice, more employees would be paid higher taxable wages to replace the nontaxable health benefits. As a result, the CBO projects that the change "will boost net federal receipts" and reduce the federal deficit by an additional $206 billion between 2015 and 2024.
For more:
- read the Forbes article
- check out the Republican Budget Committee report
- here's the CBO Outlook report (.pdf)