Politics : A US National Health Care System?

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From: TimF4/13/2012 11:59:40 AM
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No, Obamacare really doesn’t add up
By Joseph Antos
April 11, 2012, 8:41 am

Sometimes even the government cannot spend money that it does not have. That’s the simple truth behind the new study by Charles Blahous, a public trustee for Medicare and Social Security.

Blahous finds that the Affordable Care Act is expected to increase the federal deficit by at least $346 billion between now and 2021, and the price tag might be as high as $527 billion. That’s a far cry from the $143 billion in deficit reduction that the Congressional Budget Office predicted when the ACA was enacted.

The difference is the result of different ways of adding up the spending. Unlike other government programs, Medicare Part A is not authorized to borrow if it runs short of money. Instead, it is required to pay what it can and not more. CBO ignores this legal restriction on Medicare spending and assumes that the money keeps flowing.

The new study takes the trust fund rules into account. Prior to the passage of the ACA, the Medicare trustees predicted that the Part A trust fund would be exhausted in 2016. After that date, hospitals would continue to be paid but only out of the payroll tax contributions from workers and employers—not enough to fully pay the bills.

By imposing hundreds of billions in cuts to hospitals and other providers of Part A services, the ACA extended trust fund solvency to 2024. That means Medicare will have 8 additional years of spending at levels that otherwise would not have been legally possible under the current rules.

But the money saved by Medicare was not truly saved. Instead, it was used to pay for the new subsidies in Medicaid and the insurance exchanges under Obamacare. The money was spent twice, once to extend Medicare solvency and once to pay for a massive expansion of government health care.

One can certainly argue about the best way to score legislative proposals. One cannot argue that spending more money reduces the deficit. That’s the Obama administration’s position, and they’re wrong.
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