CBO Says Repealing ACA Could Boost Deficits

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The Congressional Budget Office (CBO)  last week estimated that repealing the Affordable Care Act (ACA) would increase deficits by $137 billion over the next decade and by even more after that.

“A repeal would reduce deficits during the first half of the decade but would increase them by steadily rising amounts from 2021 to 2025,” the CBO said.

Although repeal would eliminate the health care law’s insurance subsidies, other government spending would increase, notably for Medicare. At the same time, federal revenue from ACA taxes, fees and penalties would be lost.

The $137 billion estimate includes calculations on “macroeconomic feedback,” an approach that CBO has not used in previous ACA estimates.

This approach attempts to predict how legislation could affect the economy and how those changes, in turn, could impact the federal budget. Republican lawmakers this year instructed CBO to include such “dynamic scoring” in some of its work.   

Using its traditional approach, CBO estimates that repeal would increase deficits by $353 billion over the next decade. But its macroeconomic analysis indicates this would be partly offset by economic growth as more people take jobs to obtain health coverage.

CBO estimates that after 2025, repeal would raise deficits by increasing amounts regardless of whether macroeconomic feedback is considered.

The budget office, however, warns that there is great uncertainty about its repeal estimates for a variety of reasons.

External links:
Budgetary and Economic Effects of Repeal (CBO)
Mixed Effects Are Seen On a Health Law Repeal (N.Y. Times)
Obamacare Repeal: Still Vexes GOP (Politico)
Implementing Dynamic Scoring (CBO)

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