However the Supreme Court Rules, ObamaCare Is In Deep Financial Trouble
Anyone who thinks ObamaCare will cut the deficit over the next decade should look at Page 11 of the latest Congressional Budget Office report.
The table on that page shows how the trillions in ObamaCare subsidies are supposed to be “paid for” — by tax hikes or spending cuts.
What it reveals, however, is that ObamaCare increasingly relies on dubious Medicare spending cuts to cover its growing subsidy costs.
By 2025, the CBO says, ObamaCare will cut Medicare spending by $153 billion. That’s equal to 73% of what the CBO expects the exchange subsidies and the Medicaid expansion will cost in that year.
By comparison, planned Medicare spending cuts will cover only 24% of ObamaCare’s subsidy costs in 2016.
No one believes these Medicare cuts — which involve mainly payment cuts to doctors and hospitals — will happen. Medicare’s board of trustees, the Government Accountability Office and Medicare’s chief actuary have all warned they are unrealistic and unsustainable over the long term.
What’s more, the CBO has already sharply downgraded ObamaCare’s ability to reduce Medicare spending. Its latest report trims expected Medicare cuts over the next four years by 33% from its initial forecast.
Tax revenues, likewise, are coming in lower than expected, and whereas the CBO had expected ObamaCare’s tax hikes to raise $371 billion from 2016 to 2019, it now thinks they will bring in $289 billion.
As a result, despite the fact that ObamaCare’s insurance subsidies are costing less than the CBO expected, ObamaCare’s financial future is far worse than promised.
Back in 2010, for example, the CBO forecast ObamaCare would run a small surplus of $13 billion in 2019. Now it expects ObamaCare to run a $22 billion deficit that year.
And instead of $124 billion in overall deficit reduction in ObamaCare’s first 10 years, the CBO’s updated projections show it will produce a $34 billion increase from 2010 to 2019. (Nearly two years ago IBD predicted this would happen.)
Despite President Obama’s repeated claims that ObamaCare would cut the deficit by “more than $1 trillion” in its second decade (2020 to 2029), this too is wildly off the mark. According to the CBO, ObamaCare is on track to cut the deficit by just $240 billion over the first six of those years (assuming all those Medicare cuts take place), making anything like $1 trillion an impossibility.
Even the CBO admits that this is unlikely, because the forecast is “based in large part on projections of the law’s effects, which are themselves highly uncertain.” And so ObamaCare “could in fact” hike deficits “over that period.”
Since ObamaCare has already produced deficits where surpluses are supposed to be, it’s a good bet it will continue to do so for the foreseeable future.
