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Does the ACA really contain healthcare costs?

By MARCELLA S. KREITER, United Press International   |   April 15, 2012 at 4:30 AM   |   Comments

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Healthcare reform either will ease the budget deficit or add to it; Medicare reform will either save the program for future generations or gut it -- what's a U.S. taxpayer to believe?

The Census Bureau reported some 49.9 million Americans were without health insurance last year -- something President Obama is hoping to overcome with the Affordable Care Act, which is currently undergoing scrutiny in the U.S. Supreme Court.

But whether revenue will be available to finance coverage for the currently uninsured and maintain coverage for those already covered by Medicare, Medicaid and their offshoots is a fiscal nightmare over which experts disagree.

With baby boomers turning 65 at a rate of 8,000-10,000 a day, the questions are real and serious, and a wrong move now will make U.S. finances look like Greece's sooner rather than later.

House Budget Committee Chairman Paul Ryan, R-Wis., has proposed changing Medicare to a voucher system that would give future seniors a fixed stipend to help them buy private health coverage, thus keeping federal expenditures at a predictable level. The change would not affect those currently covered by Medicare or older baby boomers.

President Obama has called that proposal an attack on Medicare itself that will destroy the system.

The latest spanner in the debate comes from Charles Blahous, a conservative analyst and Medicare trustee, who said Congressional Budget Office analyses of the ACA have been misleading and that the law will actually add $1.15 trillion in spending from 2012 to 2021. To make matters worse, he said, it's likely the cost-saving rules in the law won't be enforced.

"To avoid worsening the federal fiscal outlook, legislative corrections are required before the ACA's provisions become fully effective in 2014," Blahous said in a study issued last week, "The Fiscal Consequences Of The Affordable Care Act," which can be found at http://mercatus.org/sites/default/files/publication/The-Fiscal-Consequences-of-the-Affordable-Care-Act_1.pdf.

"Roughly two-thirds of the law's subsidies for health insurance exchanges must be eliminated to avoid worsening federal deficits and the entirety of their costs eliminated to avoid further increasing federal healthcare financing commitments," he concluded.

The administration has acknowledged the early years of healthcare reform will result in increased government spending, largely due to expansion of Medicaid and the establishment of federally subsidized health insurance exchanges. Projections indicate, however, that spending will decrease as cost-containment provisions kick in.

That, Blahous said, is a typical Washington gambit -- increasing short-term pressure in hopes of an improved long-term outlook.

"A too-common legislative occurrence is for the long-term austerity measures to be later repealed or moderated before they take full effect while the added costs take root and mount over time," he said.

The key, Blahous said, is not only to reduce the deficit, but to reduce federal spending on healthcare.

"All other things being equal, a solution that fails to restrain the growth of federal healthcare commitments would result in future generations being subjected to tax burdens far higher than previous American generations have ever tolerated and suffering lower after-tax incomes," he said.

Blahous concludes the ACA will substantially worsen the federal fiscal outlook unless Congress acts to delay spending on new healthcare initiatives until promised savings can be verified, an action that would eliminate the "substantial coverage expansion envisioned" by the law.

"Although ACA supporters frequently asserted companion goals of expanding federal support for health insurance coverage, and of bending the health 'cost curve' downward, these two ambitions necessarily conflict to a certain extent," he said. "Largely because of the ACA's focus on coverage expansion, the law will greatly worsen federal fiscal strains unless significant legislative corrections are effected prior to 2014. …

"Only by considerably reducing the spending commitments made under the ACA -- or by finding new financing sources for these commitments -- will the legislation make the positive contribution to the federal fiscal outlook that experts across the ideological spectrum agree is required," Blahous said.

White House spokesman Jay Carney called Blahous' analysis faulty.

"This is obviously a partisan analysis. It does not comport with the official presentations put forward by the CBO," Carney said.

The law itself, however, is not popular and most Americans think the Supreme Court will declare it unconstitutional, the latest ABC/Washington Post poll indicated.

The poll of 1,003 adults April 5-8 found just 39 percent support the ACA and 53 percent oppose it while half said they expected the justices to rule based on their partisan beliefs rather than legal analysis.

© 2012 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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