CBO: Repealing health reform increases deficit by $109 billion

The nonpartisan Congressional Budget Office on Tuesday said repealing President Obama’s healthcare reform would increase the deficit by $109 billion over 10 years.

This is a new re-estimate in light of June’s Supreme Court ruling that upheld most of the law, and it is a smaller deficit increase than CBO previously had linked to the repeal.

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The reaffirmed finding by CBO that the healthcare law helps reduce the deficit may boost Democrats in their quest to keep the reform in effect, but it is sure to continue GOP criticism of CBO's methods. The House GOP has voted more than 30 times to repeal all or part of the law. 

The Supreme Court ruled in June that the government cannot withhold all Medicaid funding from states that do not agree to expand Medicaid coverage to more adults. It is unknown how many states may opt out of providing expanded Medicaid, but CBO assumes that some will opt out in its projections.

CBO said the ruling added uncertainty to its estimates but it has put forward a number that comes down in the middle of possible outcomes. It estimates that the ruling will save the government $84 billion because fewer people would be covered by Medicaid. CBO estimates 3 million more people will be uninsured as a result of the ruling.

Those cost reductions are not outweighed by increased costs from subsidies in the health insurance exchanges, CBO said.

In March 2011, CBO said that the law would reduce the deficit by $210 billion over 10 years, despite increasing spending by $1.042 trillion over 10 years, from 2012 until 2021. The new estimate covers 2022. Using the same time frame, repeal would only add $65 billion, CBO said. 

Other than the budget window shift, the difference in the score from 2011 also reflects the fact that the government is no longer enacting long-term care insurance provisions known as the CLASS Act, lower projections for Medicare costs and the fact that more money has already been obligated so repealing the law now does not recoup certain funds.

Both scores found that the law’s Medicare cuts, fee increases and taxes on capital gains more than made up for the new federal subsidies for poorer people to buy insurance.

CBO also assumes that a controversial tax on high-cost health insurance plans goes into effect as scheduled in 2018, though critics argue Congress will act to avoid that.

The Supreme Court in June upheld the core provision of the law — the requirement that most individuals obtain health insurance or pay a fee. The majority found that Congress has the ability to do this under its powers to impose taxes.

CBO had said that just striking down the individual mandate would have reduced the deficit by $282 billion.

House Minority Whip Steny Hoyer (D-Md.) on Tuesday called on the GOP to stop trying to repeal the law.

“These numbers tell a powerful story:  the health reform legislation we passed in the Democratic-controlled 111th Congress is achieving the goals of expanding access to insurance coverage and controlling the growth of costs for Americans’ care," he said in a statement. 

Conservatives were quick to point out that that total revenue associated with the law is now increased to $1 trillion, while the direct spending increase is now $890 billion.

“The Congressional Budget Office reported today that the Affordable Care Act imposes a $1 trillion tax increase and continues to raid Medicare by over $700 billion to fuel a new $1.7 trillion open-ended entitlement, while doing nothing to reduce the backbreaking health care costs for families and businesses," House Budget Committee Chairman Paul Ryan (R-Wis.) said in a statement. 

“This law was built with smoke and mirrors to hide the impact of the trillions of dollars of new entitlement spending," he said.  

This story was updated at 5:52 p.m.