CBO: Federal Government Will Spend More As a Result of Obamacare Delay



When the Obama administration announced that Obamacare's employer mandate and income verification requirements would be delayed by a year, one of the many questions left unanswered was: How much will this add to the deficit?

Yesterday, the Congressional Budget Office provided an answer: about $12 billion. The delay will reduce projected federal revenue by $9 billion, and increase federal spending by about $3 billion. 

Federal revenue is expected go down next year because employers who don't offer qualifying coverage won't have to pay a tax penalty. Federal spending will go up because CBO projects that a half million more people will be getting subsidized coverage through the law's exchanges and its Medicaid expansion.

But just because the delay will mean that more people get publicly subsidized coverage does not mean that more people will get coverage overall. The CBO now projects that about a million fewer people will end up with health coverage next year as a result of the delays.  

In the broader scheme of the federal budget, $12 billion is not a huge amount of money. But the higher debt levels do eat into the law's projected deficit reduction, which has already been significantly reduced thanks to other changes to the law.  What's more, these projections only reflect a one-year delay. And as CBO points out, it's the law's first year, when the law is still getting up and running — which means that these incentive changes actually have a smaller effect than they might later on. What if the anti-fraud provisions are never fully implemented? What if the employer mandate is delayed further, or repealed entirely, as some supporters of the law have suggested? Presumably that would decrease the health law's projected deficit reduction even further, perhaps even eliminating it entirely. 

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  1. Speaking of delays, that’s what I think the GOP should probably focus on right now–delaying the implementation of most of the act. The defunding route could work, but I doubt they have the courage to take that battle all the way.

    1. I expect they are too terrified to be seen as obstructionary prior to the elections.

      What the hell is wrong with our country that the minority party refusing to go along with whatever the majority wants is considered a bad thing?

      1. Are they serious about cutting down the government or not?

        1. They are serious about trying to win the next election.

          So if the electorate is serious about cutting down the government, then they are.

          I will leave the rest as an exercise to the reader.

          1. I think the reward is worth the risk, personally, but the GOP has many that don’t really want to hurt Leviathan.

    2. Eh, I don’t have a strong opinion on what they should do, but I can see an argument that the best strategy is to allow the law to take effect (putting up only token resistance), watch everyone flip out as their premiums go up and other problems emerge, and then clean up in the 2014 elections.

      At that point, with more votes in Congress and the public more decidedly against the law, the Republicans will be in a much better position to push for a repeal (except they’ll totally squander the opportunity, because they’re terrible).

      1. Our economy isn’t doing so great, and this additional albatross around its neck may cause some serious additional problems. Probably will. So I’d say the time to deal with it and a variety of other issues is now.

        1. True, but if they do it now a much greater number of people will remain convinced that Obamacare would’ve worked. I’d say the potential long-term benefits of letting it fail as visibly as possible?especially in terms of changes in public opinion?exceed the short-term harm.

          1. I think it will be harder to undo once it gets started.

  2. CNBC is reporting today that Obamacare scored a “breakthrough” by cutting a deal with eHealtinsurance.com to enroll people that will qualify for subsidies in states where the Feds are setting up and running the health exchanges.

    How can this be?

    As I understand it, the actual legislative language of Obamacare ONLY allows who are sign up through exchanges that are set up by the states themselves to qualify for federal subsidies.

    This deal is in violation of the law.

    1. There’s a lawsuit pending in Oklahoma on this very issue, targeting the IRS regs that extend subsidies and impose penalties regardless of whether a state exchange is involved.

      Haven’t kept up with it, not sure what its status is.

  3. That should read only allow people who sign up through exchanges that are set up by the states themselves to qualify for federal subsidies.

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