CBO: Obamacare Repeal Would Raise Deficit by $109 Billion

CBO, tax committee also say effects of Supreme Court decision would reduce Affordable Care Act costs by $84 billion

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The Congressional Budget Office and the staff of the Joint Committee on Taxation told House Speaker John Boehner (R-Ohio) on Tuesday that repealing the Affordable Care Act, aka Obamacare or the ACA, would raise the net federal deficit over the next 10 years by $109 billion.

Boehner had asked the CBO and the JCT for the estimate following the passage by the House on July 11 of HR 6079, the Repeal of Obamacare Act. The bill was passed following the Supreme Court’s decision on June 28 that the ACA was constitutional.

The CBO and JCT noted that the repeal “would restore provisions of law modified by that legislation as if the ACA had never been enacted,” and that eliminating the ACA’s insurance coverage provisions would be “more than offset by the combination of other spending increases and revenue reductions.”

H.R. 6079 itself, the letter to Boehner said, would reduce direct spending by $890 billion but also reduce revenues by $1 trillion over the 2013–2022 period, accounting for the $109 billion in increased net deficits.

Douglas Elmendorf, Executive Director, CBOIn a separate estimate discussed by CBO Executive Director Douglas Elmendorf (left) in his blog, the CBO and the JCT said that the health care act would cost $84 billion less than the $1.25 trillion projected in March due to the Supreme Court’s decision. The reductions in spending from lower Medicaid enrollment, Elmendorf wrote, “are expected to more than offset the increase in costs from greater participation” in the insurance exchanges being built in the states. A PDF of the full analysis can be downloaded here.

As reported on AdvisorOne’s sister site, LifeHealthPro.com, by Allison Bell, “the provisions in the Supreme Court ruling, including a provision that limits the ability of the federal government to use Medicaid aid to promote Medicaid expansion, could reduce the number of people covered by Medicaid and the Children's Health Insurance Program (CHIP) in 2022 to 43 million, from 49 million."

The Supreme Court ruling could increase the number of people who get commercial coverage through the exchanges to 25 million, from 22 million, Bell reported, and it could increase the number of people who are uninsured to 30 million, from 27 million. The number of enrollees in employer-sponsored plans could drop to 157 million, from 160 million.

The CBO and JCT analysts assumed that the government will spend an extra $9,000 for each additional individual who gets coverage through a ACA exchange by 2022.

For advisors and their clients, one provision in the Affordable Care Act is of particular interest: the 3.8% tax on investment income to take effect in 2013. Read William Byrnes and Robert Bloink's blog on how to prepare clients for this new tax

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