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The Conservative Case Against Obamacare: A Restatement

7:07 AM, Apr 21, 2014 • By JAY COST
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Sure, the Congressional Budget Office says it is “paid for,” but one must be careful to read the fine print of every CBO report. It is the very model of a good faith agency in the government, but CBO must still render its judgment based on scoring conventions that can be gamed by legislators.

Chuck Blahous of the Mercatus Center recently released a thorough review of the program's financing problems. Here is just a brief summary of what’s wrong:

a.) It cut the Medicare Part A Hospital Insurance (HI) Fund in ways that CMS thinks will be politically unsustainable. These cuts are back-ended into the later years of the CBO scoring range, a typical trick for legislators who want to use unfeasible means to pretend to keep deficits in line.

b.) It double counts money taken from the HI Fund. Because of peculiar CBO scoring conventions, money taken from Medicare Part A is not scored as borrowed money, even though it in fact is intragovernmental debt.

c.) It cuts Medicare Advantage in ways that even congressional Democrats, including those who voted for the law in the first place, pressured the White House to restore.

d.) It makes use of a “Cadillac Tax” on “high end” insurance plans, but it does not take sufficient account of the growth in health insurance costs, meaning that there will be enormous political pressure to overturn this draconian instrument. These cuts are also back-ended into the later years of the CBO scoring range.

e.) It relies on politically unsustainable mandates. The business mandate has already been delayed altogether, and the individual mandate has been significantly watered down.

f.) There are other politically unsustainable or otherwise dishonest funding mechanisms in the bill. The medical device tax will almost surely be repealed. The Community Living Assistance Services and Supports (CLASS) program is subject to adverse selection, which is why HHS decided not to implement it. However, CLASS was written so that it would accept premiums for several years without paying benefits, which meant that CBO had to score it as helping pay for the program.

In short, the Democrats used every trick in the book to avoid actually paying for this. There was no public appetite for a program akin to Medicare, which assesses a broadly based tax to pay discrete benefits. So, they increased taxes on the wealthy, added a few other small taxes, and then got the rest of the way there by smoke and mirrors.

Conservative objection #2: Obamacare has created a socially perverse array of winners and losers.

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