Budget

GAO Confirms Skepticism About ObamaCare's Health Care Cost Controls

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Who's excited about the new Government Accountability Office's auditor's report on the federal government's long-term fiscal outlook? If you just shouted yes, you may be the White House's "Director of Progressive Media & Online Response (since May 2011)," Jesse Lee, who issued the following Tweet from his official, no-kidding, confirmed White House Twitter account earlier today:

Sorry, White House Social Media Guy, all this tells us is that if the (probably imaginary) savings in the health law don't pay off, we're scheduled to rack up a mountain of debt. There's always been good reason to be skeptical of those savings, however, and the report provides no new reason to think that we'll actually see any of the law's alleged savings.

If anything, the GAO report confirms the Congressional Budget Office's uncertainty—one might even say pessimism—about the likelihood of the law's savings paying off.

Although the GAO's report says that "several provisions of PPACA were designed to control the growth of health care costs," it also notes the existence of "significant uncertainties surrounding the growth of health care costs" and cautions that Medicare's "Trustees, CBO, and the CMS Actuary have expressed concerns about the sustainability of certain health care cost-control measures over the long term." There are other concerns as well:

[The Trustees, CBO, and Medicare's actuary] have also questioned whether a provision in PPACA that would restrain spending growth by reducing the payment rates for certain Medicare services based on productivity gains observed throughout the economy is sustainable over the long term. According to CMS, health care productivity gains have historically been small, and may be difficult to achieve in the future due to several factors, including the labor intensive nature of the industry and the individual customization of treatments in many cases.

As a result of these concerns, the GAO, like CBO before it, drew up an alternative fiscal scenario in which the laws cost controls don't pay off. The results are not exactly something to tweet about. According to the report, under this second scenario, "spending on health care grows much more rapidly under this more pessimistic set of assumptions."

Like the CBO, the GAO does not take an official position on whether the pessimistic scenario is more or less likely than the one that assumes the savings will pay off. But the CBO's alternative scenarios are widely though not universally understood to be more realistic. And the fact that the GAO also felt it necessary to include a separate projection with these warnings and the projections to match suggests that, at minimum, it thinks the savings are far from guaranteed.

As Lee's the #conspiracyoffacts hashtag in Lee's Tweet makes clear, the White House likes to portray these potential future savings as facts we can be certain of. They're not. They're projections based on a set of assumptions—assumptions that the Obama administration gamed in order to produce more favorable numbers, and that every one of the federal government's major independent fiscal authorities, along with the analysts at the International Monetary Fund, have either explicitly warned or strongly implied may not be wholly reliable. If there is a conspiracy of facts here, it is in the administration's determination to ignore them.