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Public Health

Where the Republican Budget Plan Meets Reality on Health Care

The budget proposal released by House Republicans on Tuesday promises it can repeal Obamacare and save the government a lot of money in the process. But the document relies on some vague accounting to justify this claim.

It is easy, of course, to save the federal budget a lot of money by simply eliminating the spending provisions of the Affordable Care Act. Getting rid of the law’s Medicaid expansion to low-income people and its premium subsidies for middle-income insurance shoppers would save about $2 trillion over 10 years, according to the House budget estimates. That number is published clearly and prominently in the budget’s accompanying tables.

Less explicitly accounted for is the fact that the health law, despite its huge federal spending on insurance expansion, was also designed to reduce the deficit. The law imposed substantial cuts to the Medicare program and raised a series of new taxes, including ones on wages, health insurance and medical devices.

Perfect estimates are difficult at this point, because most of those changes are now integrated into current budget estimates, but it’s safe to say that the law’s Medicare cuts save more than $700 billion over the next 10 years, and the taxes will raise around $1 trillion.

The budget doesn’t ignore those dollars, but it’s awfully vague about how they can be recouped. In contrast with the $2 trillion cut in Obamacare spending that’s spelled out in its own line, there is no specific accounting of the Medicare savings and revenue gains that would be lost in a repeal.

The budget resolution directs Congress to repeal all the Obamacare taxes, but then estimates no accompanying reductions in federal revenue. That silence on the cost of those policy changes suggests that Congress would make up the difference with other revenue changes. Finding a way to preserve the money that would have been raised by those taxes would mean major changes to the federal tax code.

“A revamped tax code could raise just as much revenue as the system in place today, but without the harmful tax policies embedded in current law,” said William Allison, a spokesman for the House budget committee, in an email.

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The House speaker, John Boehner, and fellow Republicans proposed a budget on Tuesday. Repealing Obamacare is one thing; making the dollars add up is another.Credit...Doug Mills/The New York Times

The budget specifies elsewhere that called-for “tax reform” should save enough money to lower rates for both individuals and corporations and eliminate the alternative minimum tax. That means that the budget expects Congress to find enough tax revenue to cover around $1 trillion in lost Obamacare tax revenue, plus enough additional money for broad tax cuts without increasing the deficit.

“I find it hard to believe that, first, Congress would choose to repeal all of Obamacare, and then Congress would follow that up by passing a $1 trillion revenue-positive tax reform,” said Marc Goldwein, a senior vice president at the Committee for a Responsible Federal Budget, a group devoted to deficit reduction. “But that appears to be the theory of the case.”

The budget directs Congress to eliminate the health law’s Medicare cuts, but then asks Congress to find other savings in Medicare program that are “deficit neutral,” though it does not propose any specific policies that might achieve similar savings.

In addition, the budget piles on $148 billion in Medicare savings on top of the Obamacare repeal. It proposes medical malpractice reform and changes to the deductibles paid by seniors for their care. The specific dollar amounts associated with those individual changes are unspecified.

But it is clear from the budget’s hard numbers that money saved from those provisions would come on top of the savings that would replace the Obamacare cuts. (The budget also preserves Paul Ryan’s plan to convert Medicare into a competitive bidding program among private insurers and the government, though the estimated savings for that change in the budget’s first 10 years are estimated to be relatively small.)

That means that the budget assumes that if Congress wants to eliminate the Obamacare Medicare cuts, it must somehow find another several hundred billion dollars’ worth of Medicare changes to make up the difference.

Beyond Obamacare, the budget also recommends that Congress develop a new health reform package that will “increase access to quality, affordable health care by expanding choices and flexibility for individuals, families, businesses and states while promoting innovation and responsiveness.” If such a bill will cost the government money, the budget doesn’t specify where that money should come from.

Republicans in Congress may want to repeal Obamacare entirely and reduce the federal deficit. But the budget highlights how repealing the health law is much more complicated than simply cutting its spending programs.

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