The healthcare overhaul law is bad medicine and bad economic policy. The Patient Protection and Affordable Care Act was sold to the American people under the illusion of deficit reduction, but when you strip away the budgetary gimmicks, the healthcare reform law commits the country to long-term red ink.

In opposing repeal, Affordable Care Act advocates often cite the Congressional Budget Office projection that repealing the law would increase the deficit by $230 billion over the coming decade and by a modest amount in the subsequent decade. A closer examination of CBO's work and other evidence leads to the exact opposite conclusion. Repeal is the first step toward restoring fiscal sanity.

The ACA is fiscally dangerous at a moment when the U.S. is already facing a sea of red ink. It creates two massive new entitlement programs at a time when the budget is already buckling under the weight of existing entitlements. At a minimum, it will add $1 trillion to government spending over the next decade. Assertions that these costs are paid for are based on omitted costs, shifted premiums from other entitlements and unsustainable spending cuts and revenue increases. As Michael Ramlet and I showed in Health Affairs, a more comprehensive and realistic budget projection suggests that the ACA could potentially raise the federal budget deficit by more than $500 billion during the first 10 years and by nearly $1.5 trillion in the following decade.

Repeal is the first step toward restoring fiscal sanity.

Applying the same evaluation methods to score a straight repeal of the ACA again requires accounting for the same budget gimmicks used by the law's framers to manipulate the CBO's estimate. When these measures are stripped, a different picture emerges: Repeal would lower, not raise, the federal deficit by $279.7 billion in the first 10 years.

The dubious budgetary provisions that impact the budget estimate of repeal fall into three categories: unachievable savings, uncollectible revenue and already-reserved premiums.

Unachievable savings: The first category removes spending cuts that we believe the CMS will ultimately be unable to implement. These are composed of cost reductions through Medicare market-basket updates, the Independent Payment Advisory Board, Medicare Advantage interactions and the lower Part D premium subsidy for high-income beneficiaries.

Although the specifics of each differ, these provisions share two features. First, the act itself does not automatically reform Medicare in such a manner that will permit it to operate at lower budgetary cost. Accordingly, when the time comes to implement these savings, or those developed by the Independent Payment Advisory Board, the CMS will be faced with the possibility of strongly limited benefits, the inability to serve beneficiaries, or both. As a result, the cuts will be politically infeasible, as Congress is likely to continue to regularly override scheduled reductions. This concern has been voiced repeatedly by CMS Chief Actuary Richard Foster, most recently in the 2010 Medicare Trustees Report.

Uncollectible revenue: reflects on the excise tax on high-premium “Cadillac” health plans. In the Senate's version of the healthcare reform bill, this tax began immediately. After intense lobbying by organized labor, Congress relented and pushed the tax back to 2018. This raises the possibility that it will prove politically infeasible at the time of tax's implementation—similar to the experience with the Medicare Physician Payment updates under the Sustainable Growth Rate formula. Thus, the scenario shows the impact of not collecting the associated tax revenue of $78 billion over the next 10 years.

Reserved premiums: Category three focuses on Community Living Assistance Services and Supports (CLASS) Act premiums for long-term-care insurance and the potential increase in Social Security receipts. In principle, if the CLASS Act were to be a “funded” program rather than a pay-as-you-go program, these receipts would be reserved to cover future payments and not be devoted to short-term deficit reduction. Specifically, this scenario shows the implications of reserving the $70 billion in premiums expected to be raised in the first 10 years for the legislation's new long-term-care insurance.

The ACA flunks the test of real healthcare reform. It creates barriers to job growth; it fails to control healthcare costs; and it places a crushing debt burden on the backs of our children. This assessment was supported by 200 economists and experts, including two Nobel Prize winners, in a letter to congressional leaders during the House repeal debate. It was also echoed last week at a House Ways and Means Committee hearing where Medicare's independent economic expert, Foster, told Congress that the ACA probably will not hold costs down, and it will not let everybody keep their current health insurance if they like it. Foster's office has estimated that the Medicare cuts to hospitals, nursing homes and home-health agencies are likely to force about 15% of providers into the red.

Congress should repeal the ACA and start over with a clean sheet of paper adopting initiatives that would encourage providers to offer higher-quality care at lower costs; reduce the cost pressures that threaten to bankrupt Medicare and Medicaid; and give every American access to more options for quality insurance.

Douglas Holtz-Eakin, a former director of the Congressional Budget Office, is president of the American Action Forum in Washington.