Why It Matters That ObamaCare's Coverage Expansions Will Cost $2 Trillion Over a Decade


The Boston Globe editorial board says we shouldn't be concerned about the cost of ObamaCare and points to a recent Congressional Budget Office memo to prove it:

The latest attack on the Affordable Care Act, otherwise known as Obamacare, is the claim that its long-term cost has suddenly spiked from around $1 trillion to $1.7 trillion. Because the new figure is plucked from a March Congressional Budget Office estimate, opponents of the law contend that the agency's analysis shows it will be a budgetary disaster.

But as with so many assertions by critics of Obamacare, this one is misleading. Or as the CBO puts it: "Some of the commentary . . . has suggested that CBO and [the Joint Committee on Taxation] have changed their estimates of the effects of the ACA to a significant degree. That's not our perspective."

It's true that the Congressional Budget Office did not substantially change the way it estimated the effects of the health care overhaul. What it did do, however, was update its estimates to reflect nearly a full decade of implementation—which gives a better idea of the true cost of running the law over 10 years.

As I noted when the updated scores were released in March, the important thing to remember is that when the law was passed in 2010, CBO's scores looked at the cost of the law over the decade immediately following passage. But the major coverage expansions (health insurance subsidies and Medicaid)—and thus the bulk of the spending—are not scheduled to kick in until 2014.

What that means is that the initial score of slightly less than $1 trillion only reflected the cost of six years of expanded coverage. That number was important to getting the law passed, but it wasn't a great reflection of the true cost of a full decade of expanded coverage. Since we're now closer to the time when those coverage expansions are set to go live, CBO's revised scores give us a better idea of what a decade of expanded health insurance actually costs: The real price tag of the spending on coverage turns out to be closer to $2 trillion. 

This is not a dramatic shift in the CBO's view of the law, and doesn't give us a whole lot of new information, at least for those who were paying attention. We have better detail now, and official numbers, but estimates indicated that paying for the law's coverage expansions for a full decade would cost $1.8 trillion or more months before the law passed

The numbers have been updated since the following graphic was created in 2009, but it gives a pretty good idea of why the newer scores are so much higher.