Thursday, January 20, 2011

Repeal of Health Reform Would Add $230 Billion to Deficit

According to the Congressional Budget Office (CBO), a bill to repeal the healthcare reform would add up to $230 billion to the federal budget deficit over a ten-year period from 2012 to 2021. The new House speaker, John A, Boehner, dismissed the report.

The CBO noted that the federal deficit would increase because the healthcare coverage reform law would reduce federal spending in Medicare while raising federal revenues by increasing Hospital Insurance payroll tax and imposing new fees on some medical device manufacturers and health insurance companies. A more detailed legislation analysis is expected soon. The $230 billion estimate is higher than from the previous year.

Republicans have argued for a long time that the healthcare overhaul would hamper the nation’s long-term economic growth. A leading Republican economist, Douglas Holtz-Eakin, noted that the CBO’s estimate is “completely misleading description of its budgetary impacts.” He said that the costs associated with the implementation of the law and paying Medicare physicians are two important factors the CBO did not consider with reviewing the legislation. Republicans are promising to take strong measures to reduce the deficit.

Other negative consequences of repealing health reform:

1) Nearly 32 million fewer Americans will get health insurance in 2019 with about 54 million people uninsured

2) Health insurance premiums would be somewhat lower than that under the Affordable Care Act (ACA) because the average policy would cover a smaller share of the enrollee’s costs. Some of these people would eventually pay more for health insurance because the elimination of subsidies provided in the new state insurance exchanges