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Fact Check: Is Health Care Really Driving Down the Deficit?

May 22nd, 2015 No comments
U.S. Deficits projected from 2013 in 2013 dollars (politico)

U.S. Deficits projected from 2013 in 2013 dollars (politico)

Fact Check: Is Health Care Really Driving Down the Deficit?

original article written by Net Advisor

WASHINGTON DC. President Obama said that healthcare costs are going down, and tried to cite the Congressional Budget Office (CBO) numbers. The math here is a complete fantasy because major factors are excluded from the CBO’s projections.

The CBO has been wrong and grossly underestimated the costs of ACA (ObamaCare) from the start.

In 2007, the CBO made a 75-year deficit projection. This is futile to begin with because no one will ever be correct to think they can predict 75 years into the future. Major leading Wall Street corporations project usually up to two years and yet they revise their guidance often times quarterly. To think the CBO or anyone can project anywhere near 10 years with accuracy is a fantasy let alone 75 years.

Setting this long-term prediction argument aside, the CBO left out critical parts in their deficit projection equation.

“…the CBO’s 75-year projection published in 2007…was…before the recession and before the Affordable Care Act. That year, the CBO projected that the primary deficit (that is, the deficit not counting interest payments) in 2082 would be about 7.1 percent of GDP. “

— Source: PolitiFact.com (Website / PDF)

So the CBO is trying to project the future U.S. deficit but they are not going to project the interest paid on the debt which adds to the deficit? Try that with your bank. Tell them you want a 30-year mortgage, but don’t count the interest payments as part of the cost of your mortgage.

The CBO’s ‘deficit reduction’ projection also did not count the taxpayer costs of ACA (Obamacare).

“In 2010, the CBO said the health care legislation, as proposed, would reduce the deficit by an estimated $124 billion over a decade when compared to projections that did not include the Affordable Care Act.

The CBO has since said that economic conditions have changed, making this projection less reliable; CBO still says it will likely lower the deficit, but it has not pinned down a specific dollar value.”

— Source: PolitiFact.com (Website / PDF)

So the CBO’s original $124 Billion deficit reduction projection did not count the cost of interest payments on the debt, did not project the costs of Obamacare, but we should just know the deficit will be magically lower, but we don’t know how or by how much?

In February 2014, the CBO then said the annual deficit should go down by $286 Billion but also noted the national debt would go *UP* by $7.6 Trillion. If one is spending more than they have, that is called a deficit. There is no deficit reduction here.

Math Logic

The argument seems to be, we’ll we are going into debt less over time, thus we are reducing the deficit. This is complete fantasy. Borrowing zero dollars and paying debt is reducing debt. If one is spending more than they have, they are still creating debt. ‘Borrow less’ is not reducing a deficit. We discussed this ill-logic in this 2010 report.

Health Care Costs Going Up, Not Down

In July 2014, the CBO said that the long-term projection is that health-care costs are going up. The average citizen with a healthcare plan held for 3-5 years has probably figured this out by now too.

Mark McClellan, a former head of Medicare and Medicaid under President George W. Bush, now at Brookings said, “The main reason deficits are projected to rise over the next decade is spending on health care,” and the CBO agreed with McClellan.

“The pressures stemming from an aging population, rising health care costs, and an expansion of federal subsidies for health insurance would cause spending for some of the largest federal programs to increase relative to GDP,” CBO said in July.

— Source: PolitiFact.com (Website / PDF)

Fact Checking the Fact Checker

PolitiFact.com’s own analysis of Obama’s claim that ‘healthcare is driving down the deficit’ is largely based on the CBO’s ONE year projection that might lower the deficit by reducing healthcare spending which has not happened under President Obama. Then PolitiFact somehow concludes that Obama’s claims that healthcare costs are going down is, “mostly true.”

One cannot come to a true or mostly true conclusion when there is a math problem. The CBO’s math and their subsequent admission of its faulty reliability argues that the ‘mostly true’ answer is false.

One cannot leave out major factors that are part of a math problem (calculating interest expense, and calculating other costs such as healthcare) and then say healthcare is lowering the deficit while providing no math to substantiate that claim. The real answer to the Obama, CBO and Politifact.com’s claims is “trust us;” just don’t ask us how we calculate our math because we don’t know.

Since Politicfact’s post, Jonathan Gruber Ph.D., ObamaCare’s lead architect, writer and consultant admitted on video that the healthcare law was intended to deceive the CBO and Americans. As of this post date, PolitiFact, nor Obama have retracted or corrected their claims.

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About the Author:
NetAdvisor™ previously held three insurance licenses (including healthcare) and six securities licenses including two in securities compliance and management oversight. Read more bio.

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Categories: Deficit