Saturday, December 19, 2015

Annals of Derp: When those bells start to repeal...

Welcome MBRU Blogpokes!

Secret Muslim Mitch McConnell. Via National Journal.

Noticed this story from Investors Business Daily on the Senate's first successful repeal of the Affordable Care Act (not successful in the sense that it repealed the ACA, which it didn't of course, but that it passed the Senate; 50-odd more times and they'll be as good at repealing ACA as the House), and was taken aback:
little-noticed report released Friday afternoon by the Congressional Budget Office shows that the Senate bill to repeal most of ObamaCare would cut the deficit by as much as $474 billion, while boosting GDP, investment and capital stock.
The findings stand in sharp contrast to promises by President Obama and other Democrats that ObamaCare would accelerate economic growth and lower federal deficits.
Wait, really? But didn't the CBO tell us just last June that repealing the ACA would raise the deficit over the 2016-25 period by $137 billion? Yes, they did. So what's happened in the meantime to change the assumptions?

Nothing has happened, matter of fact. It took me kind of a long time to find out what the reasons are (particularly from Jon Perr at Kos), although they seem to be well enough known to the experts, so I thought I should post it here, especially since the derp is starting to spread fast among the usual suspects (just hit Townhall).

The difference is that the Senate bill doesn't repeal the biggest revenue raiser in the ACA, those famous cuts in Medicare provider payments that were supposed to pay for Obamacare (reckoned at $700 billion in the 2012 campaign, they are now scored at $879 billion). If you'll recall, those cuts were always going to be made if Republicans took power too, only they'd be paid out in tax cuts, even as they screamed at Democrats for doing it to pay for medical care for the poor, and they're keeping it. They'll raise the revenue, just not for anything in particular.

So presto, no more deficits caused by repeal!

Also the imaginary law (Obama's not going to sign it, obviously) would not take effect until January 2018, pushing the major increases in the deficit (when the effect of the Medicare cuts cools down) out beyond the 2025 mark. That's where CBO stops making specific number predictions, but they do say
CBO and JCT estimate that the reductions in revenues under the bill would grow more rapidly beyond 2025 than the reductions in outlays, both including and excluding macroeconomic feedback. In particular, the agencies estimate that the revenue losses stemming from repealing the excise tax on certain high-premium insurance plans would grow more rapidly than other components of the estimate because an increasing portion of employment-based plans are projected to be affected by the tax over time under current law. On balance, the effect of the legislation on deficits becomes increasingly negative over time, crowding out growing amounts of capital. Thus, the positive impact of macroeconomic feedback fades over time. Overall, CBO and JCT estimate that enacting H.R. 3762 would increase on-budget deficits by more than $5 billion in one or more of the four consecutive 10-year periods beginning in 2026. 
Even if repeal doesn't cause increased deficits now, because of those Medicare cuts, it still does later.

The promised GDP growth comes from a theoretical increase in labor supply (as people nearing retirement age would decide to slave longer from fear of being uninsured), and is fairly trivial (2 million workers more by 2025 than there would be under ACA—considerably less than you could get through comprehensive immigration and criminal justice reforms), and the increase in investment is more theoretical still. They don't at all examine the macroeconomic effects of 22 to 24 million fewer people having any health coverage. But we know how much it cost in 2009:
between $124 billion and $248 billion in lost productivity this year alone due to the almost 52 million uninsured Americans who live shorter lives and have poorer health. In fact an analysis by the Institute of Medicine found that, “the estimated benefits across society in healthy years of life gained by providing health insurance coverage are likely greater than the additional social costs of providing coverage to those who now lack it.”
With the Senate repeal bill we would be going back to those days, with 50 million uninsured by the CBO estimates.

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