CBO: Defunding health reform boosts deficit

A Republican plan to withhold implementation funds for the Democrats’ new healthcare law would add $5.7 billion to the deficit over 10 years, the nonpartisan congressional scorekeeper said Thursday.

In a long-term spending bill approved last month, House Republicans voted to block the federal government from using funds to implement the sweeping reform law, enacted almost a year ago. The defunding vote has become a point of contention as Republicans and Democrats try to hammer out a long-term spending measure to keep the government running past March 18.

The Congressional Budget Office (CBO) said Thursday that choking off implementation funds would cut the deficit by $1.6 billion for the rest of the year, but it would increase spending by $3.1 billion in 2012 and by smaller amounts each year through 2021.

The CBO said the defunding measure, sponsored by Rep. Denny Rehberg (R-Mont.), would hurt agencies’ abilities to implement some healthcare reform provisions, including the establishment of Medicare payment rates for 2012. The report comes a day after Health and Human Services Secretary Kathleen Sebelius warned that Medicare payments for millions of seniors could be impacted as a result of the GOP defunding measure.

The defunding measure, included in a seven-month continuing resolution, would expire at the end of September. HHS would then likely enact a retroactive payment system to make up for the previous few months, costing taxpayers an extra $1 billion, the CBO said.

“That asymmetry arises because the provision would not alter Medicare’s statutory obligation to pay the larger amount, but would also not provide an effective mechanism for recouping prior overpayments,” the scorekeeper wrote.

Halting implementation funds would also delay reform provisions expected to result in cost savings, such as the new Center for Medicare and Medicaid Innovation. 

Rehberg, chairman of the House Appropriations health subpanel, tried to put a positive spin on the report, focusing on the first year of savings while ignoring the CBO's projected long-term deficit impact.

“When you cut through the budget tricks and accounting gimmicks, it turns out that common sense wins the day,” Rehberg said in a statement. “When you strip away all of the spin, and warnings that defunding Obamacare this year would cost money, you’re left with the truth: $1.4 billion in savings this year. Only in Washington would someone actually buy the claim that it costs money not to spend money.”

Republicans on Wednesday had accused Sebelius and the Obama administration of exploiting seniors' fears to score political points. The GOP lawmakers argued that the defunding provision would not apply to Medicare because it is a mandatory program.

"[S]eniors are still entitled to their full benefits under the law,” Sen. Orrin Hatch (R-Utah) and House Ways and Means Committee Chairman Dave Camp (R-Mich.) wrote to Sebelius on Wednesday. “We are disappointed you chose to send an inaccurate letter that is certain to create unwarranted confusion and fear amongst millions of seniors.”

This story was updated at 4:46 p.m.