No matter how Republicans slice it, repealing the Affordable Care Act will add to the federal deficit, according to a new analysis by the Congressional Budget Office.
The CBO developed its estimate in two ways, using traditional “static scoring,” which looks at the direct economic effects of a law without factoring long-term effects on the economy and the GOP-favored “dynamic scoring,” which incorporates macroeconomic elements and often supports tax cuts.
In the first scenario, the deficit could increase as much as $353 billion over the next decade, in the second scenario $137 billion would be added over the past period. The number of uninsured adults would increase by 19 million in 2016, and there will be as many as 32 million people no longer in Medicaid. The losses would be partially offset by the 8 million people who would gain employment-based coverage.
“Today's report throws a bucket of ice water on those who want to repeal the Affordable Care Act. Such a repeal is a lose-lose proposition for our nation: It would cause tens of millions of people to lose health insurance while substantially increasing the federal budget deficit,” said Ron Pollack, executive director of Families USA, a consumer advocacy organization.
On the flip side, junking the law would save nearly $1.7 trillion by canceling subsidies, reducing federal funding for Medicaid and CHIP and striking a tax credit for certain small employers that provide health insurance to their employees.
Repealing the law would also boost gross domestic product by about 0.7% over the 2021-25 period.
“The ACA's largest effects on output are projected to result from several provisions that reduce the supply of labor by decreasing some people's incentives to work,” the CBO says. “Repealing those provisions would thus increase the supply of labor and increase output relative to baseline projections.”
Dismantling the ACA would also increase incentives for capital investment, both by increasing labor supply and by reducing tax rates on capital income. But the scoring agency undercut the latter benefit by noting that the deficit caused by a repeal would increase government borrowing and thus would reduce capital investment in the longer term.
Republicans took a glass half-full view of the CBO report. “Repealing the president's healthcare law would create a healthier economy. At a time when participation in the labor force is at an alarmingly low rate, getting rid of Obamacare's harmful regulations, mandates and taxes would give job creators and job seekers greater opportunity,” Rep. Tom Price (R-Ga.) said in a statement.