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Official Sources Agree: The Affordable Care Act Reduces the Deficit

Today, we are reading about another brand of “new math” in describing how the Affordable Care Act will affect our nation’s Federal budget deficit. In another attempt to refight the battles of the past, one former Bush Administration official is wrongly claiming that some of the savings in the Affordable Care Act are “double-counted” and that the law actually increases the deficit. This claim is false.

According to the official Administration and Congressional scorekeepers, the Affordable Care Act will reduce the deficit: its costs are more than fully paid for.  The Office of Management and Budget and Congressional Budget Office project lower Federal budget deficits as a result of the law. The Congressional Budget Office is charged with assessing how legislation would affect the deficit. When the health care bill was passed by Congress, CBO wrote:

“CBO and JCT estimate that enacting both pieces of legislation—H.R. 3590 and the reconciliation proposal—would produce a net reduction in federal deficits of $143 billion over the 2010–2019 period as result of changes in direct spending and revenues.”

When Congressional Republicans sought to repeal the law, CBO found that eliminating the law would increase the deficit. CBO wrote:

“[T]he effect of H.R. 2 on federal deficits as a result of changes in direct spending and revenues is likely to be an increase in the vicinity of $230 billion, plus or minus the effects of technical and economic changes to CBO’s and JCT’s projections for that period.”

And just last month, in updating its estimates of key parts of the law, CBO estimated that the insurance coverage provisions of the health care law would, compared to last year’s estimates for the same time period, cost $50 billion less.  Assuming no change to the rest of the estimates, this means $50 billion more in deficit reduction. 

OMB and CBO have never given a discount in deficit reduction due to a “double counting” of Medicare savings in an estimate of the impact of legislation. As the Center on Budget and Policy Priorities explained:

"Claims that the Medicare savings in the ACA have somehow been “double counted” are without merit… Deficit-reduction legislation that includes Medicare provisions has been accounted for in exactly the same way in previous Congresses under both political parties. For example, both the Balanced Budget Act of 1997 and the Deficit Reduction Act of 2005 (both of which were passed by Republican Congresses) included Medicare savings that reduced the federal deficit and improved the solvency of Medicare’s HI trust fund. No claims of double-counting were raised when these bills were enacted. Similarly, the Social Security Amendments of 1983 reduced the budget deficit at the same time as they improved the solvency of the Social Security trust funds."

As such, this new math fits the old pattern of mischaracterizations about the Affordable Care Act when official estimates show the health care law reduces the deficit. 

Jeanne Lambrew is Deputy Assistant to the President for Health Policy