Report: ACA’s Effect on Deficit Depends on Fate of Cost-Cutting Measures
The Affordable Care Act's effect on the federal deficit over the next 75 years largely is contingent on whether its cost-saving provisions survive, according to a report released Tuesday by the Government Accountability Office, The Hill's "Healthwatch" reports.
The ACA contains several measures aimed at curbing the projected growth in U.S. health care costs, including productivity adjustments to Medicare and the Independent Payment Advisory Board. Republicans have vociferously opposed IPAB because it can reduce Medicare payments when the program's spending rises too quickly, which they believe unjustly removes congressional authority.
Circumstances Considered in Report
For the report, federal auditors calculated the ACA's long-term effect on the federal deficit under two circumstances (Viebeck, "Healthwatch ," The Hill, 2/26).
The first assumed the law will be implemented and enforced as written, while the second scenario assumed the ACA's cost-containment measures are phased out after 2019. The second scenario also assumed previous trends and policy preferences will continue, such as Congress overriding scheduled cuts to Medicare physician reimbursements (Attias, CQ Roll Call, 2/26).
Under the first scenario, the report found the federal deficit would decrease by 1.5% of gross domestic product over the next 75 years, with 1.2% of GDP improvement coming from the ACA. However, if the law's cost-containment measures are repealed, the report estimated the deficit would increase by 0.7% of GDP (Viebeck , "Healthwatch," The Hill, 2/26).
Sen. Jeff Sessions (R-Ala.) -- top Republican on the Senate Budget Committee, who requested the report -- used the figures to estimate that the law will increase the deficit by $6.2 trillion over 75 years.
Sessions argued that the GAO report proves the ACA will not reduce the deficit as proponents have claimed. "The big taxes increases in the bill come nowhere close to covering the bill's spending," Sessions said. He added, "The big-government crowd in Washington manipulated the numbers to get the financial score they wanted, to get their bill passed and to increase their power and influence" (Viebeck , "Healthwatch," The Hill, 2/26).
Without disputing Sessions' calculations, a GAO spokesperson noted that the federal auditors did not come up with the $6.2 trillion estimate.
Report Calls for More Cost-Containment MeasuresIn addition, the auditors wrote that "[m]ore needs to be done to change the fiscal path," noting that in both scenarios the ACA's cost-containment measures were not enough "to prevent an unsustainable increase in debt held by the public." The report found, even under the first scenario, the deficit as a share of GDP under the ACA would reach a historical high just one year later than estimates before the ACA was passed (CQ Roll Call, 2/26). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.