In the five years since the Affordable Care Act became law, opponents of so-called Obamacare have sought time and again to modify, repeal and even replace the act with something more palpable to their constituents. Unfortunately, outright appeal of the ACA would not only be detrimental in the immediate term but also devastating to the United States economy of the future. According to a report issued on June 19 by the nonpartisan Congressional Budget Office, repealing Obamacare would increase the federal deficit by at least $137 billion over the next decade.
The latest report, compiled on behalf of a request by Senate Budget Chair Mike Enzi (R-WY), relies on two different methodologies for its conclusion. Traditional static reporting looks only at the raw figures in terms of direct and immediate economic impact. Using this approach, the CBO concludes that the federal deficit would increase by about $353 billion between 2016 and 2025 if the Affordable Care Act were to be repealed.
A second, newer approach called dynamic scoring takes into account macroeconomics in calculating the projected effect on the national deficit. This methodology looks at issues such as the current workforce, labor availability and other factors in order to give a broader estimate of how a repeal of the ACA would impact long-term economics. With dynamic scoring, the CBO estimates that a repeal of the ACA would lead to a reduction in the budget deficit by about $216 billion between 2021 and 2025. Overall, the reduction would offset the $353 billion increase for a net increase of $137 billion by 2025.
Several factors contribute to the difference in estimates between the static and dynamic reporting methodologies. First, the CBO assumes that low-wage workers will work fewer hours in order to get better subsidies on the Obamacare marketplaces. With fewer eligible workers contributing to the economy via taxes, the government stands to lose out on that revenue. The net effect would be to increase the deficit. By repealing the ACA, those workers would be inclined to work more hours, which would result in a 0.7 percent decrease in the national deficit between 2021 and 2025.
This decrease would not hold over the long run, however, and the CBO still predicts that a repeal of the ACA would lead to a net increase of the budget deficit. Several of the law’s provisions make health care more accessible and more affordable for people throughout the country. Repealing the law would render those benefits useless and place millions of Americans back to square one in terms of finding quality coverage. As it stands, a larger insured population helps to distribute the cost among all enrolled individuals because it keeps the risk pool steady. A repeal of the Affordable Care Act would effectively increase costs nationwide and lead to a steeper economic impact over the next decade.
Whether or not the health care law gets repealed, the deficit will most likely increase due to Medicare cuts. Still, the long-term economic benefit of Obamacare is that 19 million Americans will be able to keep their health insurance. If the new law gets repealed, then those same enrollees would lose access to medical insurance in 2016.
Republican opponents of the health care law have often cited increased federal deficits as an incentive for repealing the law. Many have claimed since the outset that the Affordable Care Act will increase the national debt and lead to wide-scale economic devastation. In reality, the CBO’s report concludes that the opposite is true. Even with a lower estimate based on dynamic scoring, it’s clear that Obamacare supports a reduction in federal deficits as its supporters have said all along.
Numbers aside, it’s evident that politicians on both sides of the congressional aisle continue to use the federal budget deficit and overall national debt as talking points around which to rally supporters. Forbes contributor Stan Collender points out that “members of Congress are ready, willing and happy to increase the debt whenever it suits their political needs” and that issues like the national debt are wielded as a scare tactic when politically expedient. Despite the CBO’s estimates, Republican opponents of the ACA most likely will continue to seek a repeal of Obamacare on principle alone.