CBO: Repealing ACA Would Grow U.S. Economy; Reduce Number of Insured by 10 Million

I have asked, and the Congressional Budget Office has answered. Well, not really.

Although, I have been urging the CBO to do a comprehensive estimate of all the effects of the Affordable Care Act, effectively for the first time since 2012. It did so last week. The main takeaway is that “repealing the ACA would increase GDP by about 0.7 percent in the 2021–2025 period, mostly because provisions of the law that are expected to reduce the supply of labor would be repealed.”

CBO concludes that repeal would increase deficits. However, this effect is much smaller than previous estimates, because this is the first time CBO has used so-called “dynamic scoring” — taking macroeconomic effects of repeal into account — instead of the simple (“static”) bookkeeping type of estimate it used to do:

Excluding the effects of macroeconomic feedback—as has been done for previous estimates related to the ACA (and most other CBO cost estimates)—CBO and JCT estimate that federal deficits would increase by $353 billion over the 2016–2025 period if the ACA was repealed.

Repeal of the ACA would raise economic output, mainly by boosting the supply of labor; the resulting increase in GDP is projected to average about 0.7 percent over the 2021–2025 period. Alone, those effects would reduce federal deficits by $216 billion over the 2016–2025 period, CBO and JCT estimate, mostly because of increased federal revenues.

However, Charles Blahous of the Mercatus Center explains that the CBO’s conclusion is incorrect, because what the agency is using as “current law” to measure the effects of repeal is not actually the current law. (You really have to wonder at the government’s newspeak.) In fact, deficits will shrink, according to Mr. Blahaus.

CBO also misreports the number of people who will become uninsured as a result of repeal as 24 million. Actually, it would be 10 million, but CBO includes the 14 million on Medicaid as a result of Obamacare. In fact, those people would lose access to a welfare program. It is wrong to count them as currently having health insurance.

Neither of these two errors are CBO’s fault. The agency measures things as the Congress tells it to. Nevertheless, there is one paragraph in the new estimate that is quite odd for a different reason:

Implementing a repeal of the ACA would present major challenges. In the five years since its enactment, nearly every key provision of the law has taken effect and has been incorporated into final rules and other administrative actions. Undoing the ACA would thus be quite complicated.

Why? The law and its regulations are harmful and frustrating. Suppose the government passed a law requiring us to wear cardboard tricorn hats, speak pig Latin on odd numbered days of the month, and hop on one leg on even numbered days. If that law were repealed, we would simply stop doing those things, no matter what regulations had been emitted pursuant to the law.

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For the pivotal alternative to Obamacare, please see the Independent Institute’s new book, A Better Choice: Healthcare Solutions for America, by John C. Goodman.

John R. Graham is a former Senior Fellow at the Independent Institute.
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