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On the ACA Impact on the Federal Budget Deficit, the Author Dana Smith compiles not only the CBO’s referendum on the topic of deficit/surplus implications, but also other NGO’s, offering largely a positive and inversely normative views on the ACA implications. Within the compilation, the Budget and Economic Outlook: 2016 to 2026 states, first of all, that
“In 2016, the federal budget deficit will increase, in relation to the size of the economy, for the first time since 2009, according to the Congressional Budget Office’s estimates. If current laws generally remained unchanged, the deficit would grow over the next 10 years, and by 2026 it would be considerably larger than its average over the past 50 years” (Congressional Health Organization, 2016).
Due to the fact that this entitlement spending for the PPACA now varies year after year, it is difficult to establish the expected expenditures, but the CHO uses data that clumps yearly growth together to create a foothold on the future projections (Congressional Health Organization, 2016). Due to the fact that the budget has been running in deficit as a result of the ACA currently, it projects that “Debt held by the public would also grow significantly from its already high level” (Congressional Health Organization, 2016). A high public debt reduces the propensity for a population to save, so if public debt continues to increase, then both healthcares can suffer as well as the economy itself if public debt rises too quickly. This would also hint that there would be even further taxation on those that stand less to benefit from the ACA, as was discussed thoroughly in 302 and somewhat in your 331 lectures; the majority of those that benefit from the ACA are those that do not have the ability to pay for a private insurer or do not work for a company that offers healthcare; essentially the poor and working-poor. These sub-groups pay few taxes on their own, so for those that do have to pay taxes; it reduces the long-term quality of life due to the fact that they save less when they’re taxed more, unless the general public is accepting when it comes to accepting less in pursuit of a utilitarian system of healthcare, however flawed it stands at this time. The most impacted groups would be the primary consumers, particularly the top 40% of earners. When they are consuming less it would dampen an already recessed economy, stunting long-run improvement and short-run efficiency.
Through this we can see that within a short run of ~10 years beginning in 2015, that the debt would exceed the revenue, thus making the social marginal benefit less than the social marginal cost. If this is to be accepted as a criticism to the ACA then it’s a pragmatic and well-founded criticism of the ACA itself, this is not to be an opinion-driven piece, as these projections are also founded on the idea that healthcare inflation would continue to increase (Congressional Health Organization). It’s uncertain whether or not government expenditures would increase if healthcare deflated, as this would be treated the same as a decrease in the price level, thus giving the optimal future that the PPACA wouldn’t be an earmark for liberal “progressives” and more of a societal benefit.
Another lesson I learned from 302, is that as people are healthier, people are happier and people can work more which stimulates the economy. If this is to be treated as true, then this should be taken into consideration: If my friends can only afford a basic plan that does not include doctor visits, fixed premiums that make it more difficult to save, would there be any social benefit whatsoever?
This would still allow those people to get sick, and the idea that if a public is better-off being vaccinated and healthy, then the population suffers. This is not a pondering of thought, but more so a rational inquiry into the idea of a federally run health-plan itself. Considering that the government is still running at a deficit, which I will cover shortly, then the money going in is only allowing the government debt, and program, to increase, and adding fuel to the fire and offering little in social benefit. If that argument can be taken as truth, then you can build a framework for fixing the problem itself; but only if that argument, or one like it, is to be accepted.
Exchange subsidies are meant to grow by 18 billion, up to 56 billion total in the 2016 year (Congressional Health Organization, 2016). While less of an increase over the previous fiscal year with a 23 billion increase, this is not meant to incite that the increase is slowing down, and that the public debt will decrease, due to the fact that the January, 2014 statutes were enacted, increasing coverage and increasing enrolles. (Congressional Health Orgnization, 2016). I feel that attempting to recognize a correlation between enrollment changes yearly relative to yearly spending you wouldn’t find it to explain the increasing cost of government expenditures. While there is an un-deniable increase in government expenditures to be forecasted for the 2016-2017 fiscal year, just like was mentioned previously; we cannot attempt to say what the economic impact of future enrollees are, as the 2014 statutes largely expanded the base of those insured by the ACA and there will not be another “enrolling shock” such as there was in the 2014-2015 fiscal year.
Using dynamic scoring and data gathered by the Congressional Budget office, I feel we’re guaranteed a non-partisan perspective. The CBO found that, bearing in mind a high level of uncertainty, that a short term (~10 years) repeal of the ACA would result in an increase in the federal budget deficit by 137 billion (Congressional Budget Office, 2015). However, over the long term there is much less uncertainty, and the CBO scores that in the long term (~20 years) repeal, the ACA would be unlikely to reduce deficits (Congressional Budget Office, 2015). This shows that regardless of the path taken, a repeal of the ACA will cost tax-payers. With the projected 2016 expenditures totaling roughly 70 billion dollars, it’s roughly half of what would be the cost of repeal over a 10-year span.
This shouldn’t be taken as an afterthought following 2016, because as expenditures rise, the CBO will most likely confirm that expenditures will continue to rise in 2017-2018. Following this subject, the CBO also found that excluding the feedback of the ACA, the deficits would increase by $353 billion, more than 5x what the program would cost if it was ceased (Congressional Budget Office, 2015). While also having a degree of uncertainty, if you were to incorporate feedback into your analysis, it’s estimated that it would reduce future deficits by $216 billion, were we arrive at the 137 billion dollar number if the program was repealed (Congressional Budget Office, 2015).
Continuing on with the Congressional Budget Office’s report on the cost of repealing the ACA and relief of public debt as a result, a 2012 assessment showed that:
“On net, CBO and JCT estimate, repealing the ACA would increase federal budget deficits by $109 billion over the 2013–2022 period. Repealing the coverage provisions discussed in this report would save $1,171 billion over that period, but repealing the rest of the act would increase direct spending and reduce revenues by a total of $1,280 billion.” (Congressional Budget Office, 2012).
What we see here, is that prior to the 2014 provisions that extended coverage and increased federal expenditures overall, that the cost to repeal the ACA would have been cheaper, and if had that been done, public debt would be roughly ~30 billion less than it is now. What is unfortunate is that, as I mentioned the earmarks earlier, it will only increase taxes in the future. With more taxation for a program that gets repealed, a more efficient program could have gone into place, as I would not remark it as dead-weight loss, as estimated by the CBO in 2012, 1.171 trillion dollars of tax-payer money would be saved if the 2014 provisions were repealed, but repealing the act would “increase direct spending and reduce revenues by a total of $1,280,000,000 (Congressional Budget Office, 2012).
Though the CBO’s data should be taken with a grain of salt, as there are 3 separate reports from three separate years all with different estimates. The issue is that they are all finding that there is a large cost associated with keeping the program in place. Going back to my previous thoughts regarding social cost verses benefit, you probably couldn’t say that the taxes paid to cover the tracks left 10 years prior of the ACA repeal was worthwhile or beneficial to the population in any way.
Another interesting note mentioned in the 2012 Congressional Budget Office report stated that the federal government would cover all expansion-related expenditures until 2016, it is then that the states will have to pick up 10% of the bill regarding Medicaid related expansions, thus increasing the tax burden even more. This could be especially worrisome for states that already face budgetary deficits in which the 10% could reduce a drastic amount of entitlement spending, and because it’s difficult to gauge the rate of Medicaid expansion. This is troublesome for state tax-payers as there are many programs that the public does not agree with, and having another to pile on-top of it to forgo a state-fiscal expansion that creates jobs instead of covers debt is detrimental to the state economy. Such a situation would choke away jobs that could otherwise be taxed and then used for something beneficial, such as cleaning up Brownfield sites, supplying jobs that way, or embracing renewable energy with collected funds. I mention the Brownfield sites because I believe that public health would be more so improved if these facilities near urban areas were cleared of their classification as a health hazard. There’s less gripe about a benefit/cost when it comes to cleaning up polluted areas cities and other rural areas, where the existence of the areas has a negative effect on the population.
While the CBO is believed to be non-partisan in its accounting, certain detractors have come to lay out their concerns regarding the accounting done by the group. In The CBO is using Enron-style accounting on Obamacare, author Ben Domenech is skeptical and quotes the CBO in saying that “the long-term budgetary impact could be quite different if key provisions were ultimately changed or not fully implemented” (Domenech, B, 2014). Thus, it’s concluded from his analysis that the CBO purposefully neglects to incorporate future costs into its analysis of the current trend in ACA spending. When Paul Ryan asked the CBO for a sensitivity analysis regarding incorporating 2 of 4 provisions, the CBO stated that:
“If the changes described above were made to the legislation, CBO would expect that federal budget deficits during the decade beyond 2019 would increase relative to those projected under current law—with a total effect during that decade in a broad range around one-quarter percent of GDP.” (Domenech, B, 2014).
With just two provisions that would accrue a one-quarter percent increase relative to GDP it appears that its opportunistic for the CBO to ignore them in their primary report. At this point, it should be accepted that the accounting is not all similar to Enron, but rather very conservative in its expenditures both in the short term (~10 years) and long term (75 years). It is also likely that if health-care inflation costs continue to increase as they have, plotting a long term analysis would seem to be even more improbable. This makes another issue out of the importance of inflation. There was little to no adjustment in the CBO’s report relative to healthcare inflation rates in the short/long terms, which doubles down on the CBO’s ability to accurately decipher overall expenditures over the next decades.
I know previously I mentioned that this was not meant to be an opinionated piece; but I do not see there to be an opinion. I do believe there is a way to have a public choice for healthcare that would not result in trillion-dollar expenditures over the next decade, and taxes that an already shrinking economy would have difficulty paying. There is no doubt I am a very moderate liberal, I will be voting for Sanders, if not then Hillary in the general, but I do believe that there is an issue with a shrinking middle class and decreasing taxes on the rich; which I do believe neither Trump or Clinton has the gall to do.
As for the financing of the ACA, more planning should have been done prior to the launch. I feel it’s been pushed under the rug by the media that insists on bringing us stories irrelevant to the true reality of the state of the world as it happens. It is unfortunate that it’s this way, but as long as the media can distract people long enough to forget what the real issues facing our country, global economy, foreign relations, etc. The longer people will be kept in the dark regarding what’s really at stake when little is reported on massive losses; and increased taxes on a shrinking middle class.
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