June 26, 2012

Truth Test: Summers off-base on the costs of Obama's health care law

By Michael Shepherd mshepherd@centralmaine.com
Staff Writer

"And, as if all of this was not enough, the largest federal program ever devised, Obamacare, is now poised to take control of (one-fifth) of our economy." - Secretary of State Charlie Summers' campaign "message" web page

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TRUTH TEST is a regular feature of MaineToday Media’s campaign coverage in which we cast a critical eye on the truthfulness of advertising and public comments by political candidates.

There's no way around it: The Republican nominee to replace Olympia Snowe in the U.S. Senate deviates wildly from authoritative analyses on the subject.

A Congressional Budget Office estimate in March said that from 2012 to 2022, the law's insurance provisions should have a net cost of just over $1.2 trillion after certain offsets. On a yearly basis, the expected annual cost averages out to about $154 billion from 2016 to 2022.

In March 2011, the Congressional Budget Office's director testified that the law will likely reduce the federal deficit by $210 billion because of changes "in direct spending and revenues" from 2012 to 2021.

But it could be less of a reduction because the CLASS Act, a long-term care insurance program, accounted for $86 billion of savings in the 2011 estimate. Later that year, the Obama administration said it wouldn't implement that portion of the act.

So to recap, the Affordable Care Act, often referred to as Obamacare, is costly, but it may be offset enough to reduce spending. But is it, as Summers said, the biggest federal program ever?

It can't be.

The March estimate put gross costs of Obamacare from 2012 to 2019 at just over $1 trillion.

But government programs like Social Security, Medicaid and Medicare, also established through congressional actions, dwarf the Affordable Care Act, and they're ballooning.

A January outlook by the Congressional Budget Office says net Medicare spending from 2013 to 2022 was projected at more than $6.5 trillion, while the feds are expected to pay nearly $4.5 trillion to Medicaid.

Social Security is even bigger: the outlook estimates spending on that at more than $10.5 trillion. In 2017, we are expected to spend more than $1 trillion on Social Security in a year for the first time.

Obamacare pales in comparison to those relics of progressive administrations of years past.

As for Summers' "one-fifth" statement, that looks off-base after cobbling together statistics from groups watching the health care debate closely.

The Altarum Institute, a nonprofit health systems research company, reported in May that health care spending's share of gross domestic product was 18 percent in March, a fifth of a percentage point off our all-time high, in June 2011.

The costs are rising and are projected to rise more after Obamacare is fully implemented.

Findings from a 2011 report by the Office of the Actuary at the Centers for Medicare and Medicaid Services project health care spending in 2020 at more than $4.6 trillion, making up 19.8 percent of GDP.

Much of that is because of an expected increase in access. The report says expanded Medicaid and private insurance should increase demand for health care, including prescription drugs and physician and clinical services.

By 2014, when much of Obamacare kicks in, the report says "national health spending is projected to grow 8.3 percent, up from 5.5 percent in 2013."

So while Obamacare may push health spending's GDP share toward and perhaps past 20 percent, it's certainly not the only reason it would be that high.

Finally, after the 2010 Congressional Budget Office estimate, the Kaiser Family Foundation, a nonprofit group that studies health care, released a video saying Obamacare would take up 3 percent of total federal health care spending and 2 percent of the total federal budget.

The Kaiser estimate suggests it probably won't even be a fifth of a fifth.

Verdict: We're working off fluid estimates, but Summers' assertions have little basis. There are many larger government programs, and while health care spending could likely comprise a fifth of our economy in the coming years, Obamacare is just a piece of it.

We rate this statement false.

Michael Shepherd can be contacted at 621-5632 or at:

mshepherd@mainetoday.com

Twitter: mikeshepherdme

 

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