Obamacare Will Raise Deficit Says New Study

Adding fuel to the fire on the debates over the health care law, a leading conservative economist has suggested that Obamacare will only add to the national deficit and not reduce it.

Charles Blahous, a former Bush administration official who serves as public trustee overseeing Medicare and Social Security finances, released the results of his study which estimates that the health care law will add at least $340 billion to the nation’s deficit. This is contrary to President Obama’s promise in 2009 that he would not endorse a health care plan that “adds one dime to” to the federal deficit.

The Congressional Budget Office said in an estimate last year that repealing the law actually would increase deficits by $210 billion from 2012-2021. But the CBO has not updated that projection. The government has recently been running annual deficits in the $1 trillion range.

Blahous has put forward several factors in support of his argument: • The health care's law deficit cushion has been reduced by more than $80 billion because of the administration's decision not to move forward with a new long-term care insurance program that was part of the legislation. The Community Living Assistance Services and Supports program raised money in the short turn, but would have turned into a fiscal drain over the years. • The cost of health insurance subsidies for millions of low-income and middle-class uninsured people could turn out to be higher than forecast, particularly if employers scale back their own coverage. • Various cost control measures, including a tax on high-end insurance plans that doesn't kick in until 2018, could deliver less than expected.

The law expands health insurance coverage to more than 30 million uninsured people, financing it with a mix of Medicare cuts and new taxes and fees.

According to Blahous, the decision to use Medicare cuts to pay for the expansion of coverage for the uninsured will only aggravate matters. When the money from the Medicare savings has been spent, lawmakers will have to find other funds to prevent that program's insolvency.

The White House has dismissed the Blahous study calling it "new math (that) fits the old pattern of mischaracterizations" about the health care law. However, there is little doubt that the law encourages a new commitment to health care spending.

In 2011, Milliman, Inc. conducted a review of the requirements and mandates of Obamacare to determine its impact for Ohioans. The study found that the health care law will raise health insurance premiums for individuals in Ohio from 55 to 85 percent on average. With more employers likely to drop coverage for employees because it is too unaffordable and too unpredictable, more Ohioans will become part of a government-subsidized program costing all taxpayers more money to pay for the health insurance subsidies for those that were previously covered by their employers.

Like other states, Ohio too is trying hard to balance its budget. But if the results of the Blahous study are indeed true, this law is going to cause health care spending in Ohio and all over the country, to escalate like never before, adding to their deficit and worsening the outlook.