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Charles Blahous: Obamacare’s Financial Unraveling: Predictable, and Predicted October 10, 2013

Advocates marketed the Affordable Care Act (ACA), known colloquially as “Obamacare,” to the American public as a way to “bend the cost curve” of soaring health care costs downward. But despite its supporters’ hopes, the 2010 legislation was fiscally reckless, markedly increasing the government’s already-unsustainable health spending commitments at a time of record deficits. Three years later, the fiscal harm stemming from the ACA is as bad as-and even worse than-many experts predicted. The problem lies with the nature of the law itself, promising trillions in new government benefits while relying on dubious financing mechanisms. These problems were not only foreseeable, they were indeed widely foreseen.

Even before the president signed the ACA into law, non-partisan analysts demonstrated that the belief it would reduce federal deficits was based on a misunderstanding of government accounting. The ACA’s projected savings from Medicare payment reductions were in effect being doubly committed: once to extend Medicare solvency and a second time to fund a massive coverage expansion. Both the Congressional Budget Office(CBO) and the Medicare Chief Actuary alerted Congress to the problem at the time. By counting projected savings only once, my own subsequent study demonstrated that the ACA would add roughly $340 billion to federal deficits in its first decade.

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