Phillip Klein of The Washington Examiner is shocked. Phillip Klein is appalled. He’s shocked and appalled. It seems that he was the last individual in Washington, DC to get the message that The Affordable Care Act of 2009 (AKA ObamaCare) was going to take a wee tad more out of the national wallet than we were previously led to believe after the CBO estimated it’s ten year impact in March of 2010. Klein hyperventilated below.
President Obama’s national health care law will cost $1.76 trillion over a decade, according to a new projection released today by the Congressional Budget Office, rather than the $940 billion forecast when it was signed into law. Democrats employed many accounting tricks when they were pushing through the national health care legislation, the most egregious of which was to delay full implementation of the law until 2014, so it would appear cheaper under the CBO’s standard ten-year budget window and, at least on paper, meet Obama’s pledge that the legislation would cost “around $900 billion over 10 years.”
(The Washington Examiner)
Yep, that’s right Mr. Klein, the law was foisted off four years into the future in order to game the CBO ground rules for budgetary impact. A simple examination of the original CBO ACA budgetary impact estimate in Mar 2010 versus the mandatory annual update in Mar 2012 tells us just how badly the system just got yinced. All numbers below are in $Bn.
The First CBO Estimate of The ACA
The March 2010 estimate covers the impact window of 2010 to 2019 and gets us to a figure that is solidly under the $900 Bn per decade that our President flashed around town as an argument in favor of how frugal and cheap this new entitlement would be. It purports to show a law that only adds $79Bn/year to the Federal Budget.
It performs this feat of financial prestidigitation by counting four years of set-up costs as if they were actual full-on coverage. The law essentially doesn’t go full-metal Khrushchev until 2014. Thus, the time period 2010 to 2013 imposes only $31Bn or less than 5% of the 2010 to 2019 budgetary impacts.
The next chart shows the time period of 2012 to 2022. It shows a net budgetary impact of $1,252 Bn over 11 years. This gives us an annual cost of slightly more than $113Bn. This occurs because the time-phasing of the new 11 year estimate includes 9 operational years of ACA expenses and only 2 set-up years. The set-up years in the new estimate are set to cost $8bn total or less than 1% of the total budgetary impacts.
The Updated Cost of The ACA (11 Year Phasing Vs 10 in Original)
The final chart combines the two estimates over the entire time-phase 2010 to 2022 to demonstrate what costs were sunk, what costs were common to both estimates and what costs were concealed in the initial CBO estimate. The sunk costs column shows that an estimates $11Bn worth of set-up fees have been expended in 2010 and 2011. The common cost window of the two estimates (2010-2019) shows that the original estimate called for $783Bn ($794Bn – $11Bn sunk) to be expended in the original estimate. This compares to an estimated $772Bn to be expended in the new estimate.
...And Here's Where They Hid $481Bn
We perceive the true mendacity of passing a law in 2010 and phasing its actual operation to start in 2014 when we compare the costs for each estimate from 2020 to 2022. The original estimate has no such costs; the new estimate has $481Bn. Yep, that’s almost ½ Trillion that got laundered via the ground rules and assumptions relevant to how the CBO estimates costs. It kind of makes me wonder how Congress got the high approval rating of 11%.
In conclusion, the CBO didn’t lie to Phillip Klein or to Ma and Pa Middleton. They played a game by a circumscribed set of rules. The legislators that designed the Affordable Care Act knew these rules and gamed them in a disingenuous fashion to make the CBO estimate appear to say something that was obviously not the actual truth. Figures don’t lie, but liars can and do figure. Therefore, the CBO can, is and will be turned into a tool of disinformation by the dishonest leeches America keeps sending to Congress with depressing regularity.