The Affordable Care Act (2010), commonly known as "Obamacare," will add between $340 billion and $530 billion to federal government deficits over the next 10 years, according to Charles Blahous, a public trustee for the Social Security and Medicare trust funds.
When the ACA was signed into law, Democrats and President Obama claimed, based upon Congressional Budget Office estimates, that it would reduce the deficit by $132 billion over 10 years. This deficit reduction was one of the principle reasons provided by Obama that the nation needed the health care reform measure.
If Blahous' calculations are correct, the ACA could cost as much as $662 billion more than advertised.
Last year, the department of Health and Human Services eliminated the CLASS Act, a long-term care program that was intended to comprise $86 billion of the intended deficit reduction. The administration acknowledged the program was unworkable because not enough healthy people could be encouraged to pay into the program.
Blahous' estimates are based upon the effect of eliminating the CLASS Act and what he refers to as the "double-counting" of Medicare revenue. Medicare savings which were passed to extend the solvency of the Medicare HI trust fund are being used to finance new programs in the law designed to expand Medicare eligibility, Blahous claims.
Blahous also expects the cost of the new federally-subsidized health care exchanges to be greater than expected, revenues from new taxes to not increase as much as anticipated, and the cost-savings from the Independent Payment Advisory Board to be less than estimated, to arrive at his numbers.
A statement posted on the White House blog accused Blahous of using "new math" to arrive at his estimates.
"In another attempt to refight the battles of the past, one former Bush Administration official is wrongly claiming that some of the savings in the Affordable Care Act are 'double-counted' and that the law actually increases the deficit. This claim is false.
"According to the official Administration and Congressional scorekeepers, the Affordable Care Act will reduce the deficit: its costs are more than fully paid for. The Office of Management and Budget and Congressional Budget Office project lower Federal budget deficits as a result of the law," a White House official wrote.
An actuary hired last year by HHS as an independent technical adviser to examine the financial impact of the ACA acknowledged the double-counting issue in his testimony.
"Trust fund accounting considers the same lower expenditures and additional revenues as extending the exhaustion date of the HI trust fund. In practice, the improved HI financing cannot be simultaneously used to finance other Federal outlays (such as the coverage expansions) and to extend the trust fund, despite the appearance of this result from the respective accounting conventions," Richard Foster wrote.
Last month, the Supreme Court heard oral arguments in a series of cases challenging the constitutionality of the ACA. The court could strike down all or part of the law this summer when it delivers its ruling.
Blahous was appointed by Obama in 2010 as the Republican trustee for Medicare and Social Security. He is also a senior research fellow at George Mason University's Mercatus Center, a fiscally conservative think tank.
Mercatus Center posted a video of Blahous explaining the double-counting issue (see below).