ven before the president signed the ACA into law, non-partisan analysts demonstrated that the belief it would reduce federal deficits was based on a misunderstanding of government accounting. The ACA’s projected savings from Medicare payment reductions were in effect being doubly committed: once to extend Medicare solvency and a second time to fund a massive coverage expansion. Both the Congressional Budget Office (CBO) and the Medicare Chief Actuary alerted Congress to the problem at the time. By counting projected savings only once, my own subsequent study demonstrated that the ACA would add roughly $340 billion to federal deficits in its first decade.
The reality was always likely to be worse than that estimate. The positive case for the ACA’s financial integrity hung on two improbable outcomes: that all of its cost-savings provisions would work exactly as hoped, while none of its spending provisions would cost more than envisioned. Yet CBO warned at the time that many of the law’s cost-saving provisions “might be difficult to sustain,” while the Medicare Chief Actuary also warned that projected savings “may be unrealistic.” My own conclusion after the law’s passage was that, “the proceeds of such cost-savings cannot safely be spent until they have verifiably accrued.”
Congress can’t spend money it doesn’t have? Where’s Blahous been the last 80 years?
More seriously, he’s been one of the top guys on the ACA’s fundamental problems — or maybe we should refer them as “inherent contradictions.” Blahous concludes with a warning to scale back “the ACA’s spending commitments before millions become dependent on benefits that the government is not in a position to pay.”
But I do believe that was the entire point of the law.
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