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Tuesday, March 20, 2012

What the CBO said (and didn't say) about the Affordable Care Act

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The Congressional Budget Office released a new report this morning on the costs of the Affordable Care Act, and ever since, Fox News, congressional Republicans, the conservative Washington Times, and a variety of conservative blogs have been pretty worked up about the CBO findings.
They may want to take another look at it.

Associated Press
Rep. Tom Price (R-Ga.) may want to read CBO reports more carefully.
In the right's defense, CBO reports can get a little tricky if you're not used to looking at them -- they're not light reading for lay audiences -- but that doesn't excuse folks like Rep. Tom Price (R-Ga.), the chairman of the Republican Policy Committee, from making bogus claims about a document he clearly didn't understand.
For conservatives, the CBO report shows that the cost of the health care law has nearly doubled, which makes Republicans feel better about themselves, and allegedly contradicts previous evidence that the Affordable Care Act will lower the deficit. For those who read the CBO report and understood it, the truth is more mundane. As Sahil Kapur explained, this really isn't that complicated.
CBO's actual revised estimate is that the "gross costs of the coverage provisions" -- the money used to provide people Medicaid or private insurance -- has risen by about $50 billion over the 2012-2021 period since its previous estimate, from $1.445 trillion to $1.496 trillion. That's the only relevant change to spending projections in the report.
So where are conservatives getting the idea that the cost of the law doubled? When it passed in 2010, CBO said its 10-year outlays would be about $940 billion. But because the law isn't set to be fully implemented until 2014, when the coverage expansion takes effect, that initial estimate included several years in which the law cost very little. Now that it's 2012, CBO's 10-year outlook captures more years during which the law will be in full effect. The law's price tag appears higher, but its costs in no way doubled.
The overall cost appears just a little higher -- about $5 billion per year for the next decade -- and as Ezra Klein noted, the CBO analysis "doesn't include the Medicare cuts, or many of the tax increases, that pay for the legislation."
Like it or not, the CBO report still shows the Affordable Care Act doing what it's supposed to do, while cutting the deficit, just as proponents argued during the debate in 2009 and 2010. The arguments Democrats made at the time are bolstered, not undermined, by the new data. Indeed, as Jonathan Cohn noted, "The real news of the CBO estimate is that, according to its models, health care reform is going to save even more taxpayer dollars than previously thought."
In other words, Republicans and their allies are pointing to a CBO analysis that, if read carefully, shows that Republicans and their allies are wrong.
Oops.

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