Repealing President Barack Obama's signature healthcare law would modestly increase the budget deficit even as it boosts the economy, according to a nonpartisan government study released Friday.
The Congressional Budget Office report says that completely repealing the law would, on average, increase the economy by 0.7% a year when economic effects have had a chance to kick in at the start of the '20s. That's mostly because more people would enter the workforce or work more hours to make up for the lack of government healthcare subsidies.
But repealing the law's spending cuts and tax increases would add $137 billion to the federal deficit over the coming decade, CBO says, even as almost $1.7 trillion in coverage costs would disappear. Repeal would reduce deficits in the first few years but increase them by steadily rising amounts as time goes on.
The study comes as Washington awaits a decision from the Supreme Court on whether to nullify coverage subsidies in more than 30 states. In a twist, the budget office says that if the subsidies are curtailed, it would reduce estimates of savings generated by repealing the Affordable Care Act.
Conservatives who brought the lawsuit say the law's literal wording prevents the federal government from subsidizing private health insurance premiums in states that failed to set up their own insurance markets. Most have not done so, reflecting continued political opposition to the program. The administration argues that the law intended subsidies to be available in all states.
The Supreme Court is expected to issue their decision by the end of June.
Republicans in control of the House and Senate have said that if the court strikes down subsidies in the mostly GOP-held states that would be affected, they would advance legislation to ease the immediate effect on people who would lose coverage.
The CBO provides lawmakers with nonpartisan budget and economic analysis, and Republicans controlling Congress have increasingly given the office a mandate to incorporate the economic effects of major legislation its work. CBO analysts always caution that their studies of legislation can be uncertain, especially over many years.
Under its traditional model deficits would increase by $353 billion over the coming decade. Adding the economic factors cuts the repeal's effect on the deficit by more than half over 10 years, the report says.
The budget scorekeepers also offered a cautionary note to Congress: Obama's law by now is so enmeshed with the healthcare system that uprooting it would create its own issues.
"Implementing a repeal of the ACA would present major challenges," the report said. "In the five years since its enactment, nearly every key provision of the law has taken effect and has been incorporated into final rules and other administrative actions. Undoing the ACA would thus be quite complicated."
That echoes recent comments by the president in a speech to an association of Catholic hospitals. Obama said his law "is now part of the fabric of how we care for one another."