Obamacare: “Greatest Act of Fiscal Irresponsibility Ever Committed by Federal Legislators”

While the Administration is claiming that the Affordable Care Act is now so successful that it can never be repealed, there is reason to be skeptical.

Consider the words of Charles Blahous about the enrollment figures:

Earlier this month there was tremendous press attention to new data indicating that enrollment in the Affordable Care Act (ACA)’s health insurance exchanges had surpassed 7 million. The White House took a victory lap while much of the press, desperate to write something positive after months of reporting on website glitches and insurance plan cancellations, characterized the milestone as good political news for ACA supporters. Our national discussion, however, is missing the truly significant story here; what is unfolding before our eyes is a colossal fiscal disaster, poised to haunt legislators and taxpayers for decades to come.

It is quite possible that the ACA is shaping up as the greatest act of fiscal irresponsibility ever committed by federal legislators. Nothing immediately comes to mind as comparable to it. Certainly no tax legislation is, because tax rates rise and fall frequently, such that one Congress’s tax cut can be (and often is) undone by a later tax increase. The same is true for legislation affecting appropriated spending programs. But the ACA is a commitment to permanently subsidize comprehensive health insurance for millions who could not otherwise afford it, which the federal government has no viable plan to finance. Moreover, experience shows that it is very difficult to scale back such spending once large numbers of Americans have been made dependent on it. 

The facts enumerated by Blahous are rather undeniable but terrifying. Obamacare is a spending commitment that is comparable to Social Security, Medicaid, or Medicare. While those programs are becoming too expensive for us to manage, we have now added another one. Furthermore, this new program was added in a far worse economy and a far worse fiscal situation than that which existed when the previous programs were started. So now, no one knows where the money to pay for Obamacare is going to come from.

Blahous, who once thought Obamacare as written, was going to add hundreds of billions to annual deficits, points out that it is now far worse off as the various revenue-collecting aspects of the law have been derailed:

CLASS: The ACA’s “CLASS” long-term care provisions were originally projected to generate $37 billion in net premiums through 2015 ($86 billion over ten years). CLASS was later suspended due to its long-term financial unworkability, meaning these revenues have not materialized and will not.

Employer/individual mandate penalties: These were supposed to have brought in $12 billion through 2015, $101 billion over the first ten years. Because the Obama Administration has repeatedly delayed their enforcement, to date they haven’t brought in much of anything. Some ACA advocates are even beginning to downplay the significance of possibly ditching these mandates altogether, though they were central to the law’s financing scheme.

Medicare Advantage: The ACA was supposed to be financed in part by cuts to Medicare Advantage (MA) totaling $31 billion through FY2015, $128 billion over the first ten years. The White House recently announced that planned MA cuts will not go into effect after all.

Other controversial provisions: The ACA’s most controversial savings provisions – among them its ambitious Medicare provider payment reductions, the tax on so-called “Cadillac” health plans, and cost-saving decisions of the Independent Payment Advisory Board– have yet to be tested. Given that less-controversial provisions have failed to meet their savings targets, there is little basis for confidence that these more controversial ones will do so. 

What we have then is a program that is going to destroy us as a nation far faster than the rate of our decline would have been without it.