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CBO says ObamaCare Will Not Reduce the Deficit… Again
July 7, 2010
No surprises here: Director of the non-partisan Congressional Budget Office, Douglas Elmendorf, told Obama’s bipartisan deficit commission this week that the new health care reform bill will not reduce the national deficit.
In its annual “Long-Term Budget Outlook,” the CBO reported “federal spending on major mandatory health care programs will grow from roughly 5 percent of GDP today to about 10 percent in 2035 and will continue to increase thereafter.”
Throughout the health care debate, Obama and his allies repeatedly promised that health care reform would reduce the deficit; this new report takes a hard line, saying, as the CBO has before, the cuts made by ObamaCare won’t diminish the growing problem of health care spending.
Instead, the report called ObamaCare’s impact on reducing costs “modest” and questioned the sustainability of the program given the Democrats’ ignored the problem of the Medicare reimbursement formula, SGR:
“[T]he legislation did not alter the sustainable growth rate mechanism used for determining updates to Medicare’s payment rates for physicians; under that mechanism, those rates are scheduled to be reduced by about 21 percent in 2010 and then decline further in subsequent years. Since that mechanism was enacted in 1997, its provisions have usually been modified to avoid scheduled reductions in payment rates, and legislation was just enacted to delay cuts in those payment rates until December 2010…. At the same time, the legislation includes provisions that will constrain payment rates for other providers of Medicare’s services. In particular, increases in payment rates for many providers will be held below the rate of increase in the average cost of providers’ inputs.”
In other words, the only way to afford ObamaCare and its massive expansion to Medicare is to cut reimbursements at their scheduled rates. Bad news for physicians!
Worse yet, the report notes that if the Democratic Congress does not stick to these cost-cutting measures, America’s fiscal situation will be much worse than the CBO projects.
Elmendorf summarizes the report’s findings on the CBO blog, “Growth in spending on health care programs remains the central fiscal challenge facing the nation. CBO projects that if current laws do not change, federal spending on major mandatory health care programs will grow from roughly 5 percent of GDP today to about 10 percent in 2035 and will continue to increase thereafter.…That estimate includes all of the effects of the recently enacted health care legislation.”
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