It’s hard to get a straight answer on the Affordable Care Act. Conversation on every component of the law is hugely partisan; Democrats say it will reform the flawed American health insurance industry and provide long overdue universal health care for citizens. Conservatives claim it is an unconstitutional expansion of federal power and doomed to fail. Supporters insist the law will reduce the deficit in the next two decades, while Republicans say it will balloon entitlement spending and drive up America’s already record breaking deficit.
What can be expected after the spectacle of the ACA’s passage? The president’s chief domestic achievement passed without a single GOP vote. Talk of death panels is not far in the media’s rearview. Anyone could have predicted implementation of the law would be a challenge, and Republicans have not disappointed.
Regardless of the partisan debate, the various effects of the law won’t be clear for months and years to come, particularly whether the economics behind the law will hold true to Obama’s claims and drive down the price of insurance while improving quality of care.
What is certain of Obamacare (and the root of the GOP’s hysteria), is that if successfully implemented it will become an additional entitlement program and follow the troubling trajectory of those before it. Namely, benefits will accumulate and expand, more people will be made eligible to receive them and politicians will consistently shy from provisions that restrict costs because people don’t vote to curb benefits.
Historically, government assistance programs signed into law under (Democratic) presidents in the twentieth century have snowballed to unanticipated sizes over time. Initially, Social Security only provided benefits to retired workers. It eventually extended government support to workers’ dependents and survivors, created a disability insurance program, and, inevitably, expanded benefits. Medicare, most recently, grew under President George W. Bush by extending coverage for prescription drugs. When passed, Medicaid applied only to those receiving welfare benefits. Today it supports other “poverty related groups” like pregnant women and encompasses the Children’s Health Insurance Program.
The histories of Social Security, Medicare and Medicaid, demonstrate entitlement programs’ durability and reliable expansion over time. Congress’ repeal of the Medicare Catastrophic Coverage Act in 1989, one year after President Reagan signed it into law, was a rare incidence of law makers reigning in government benefit programs.
In 2012 spending on entitlements constituted 62 percent of the federal budget. Mandatory spending is at its highest point in history, and the principle culprit of the United States’ unbridled deficit – which is predicted to be $744 billion for fiscal year 2014. Though the 2014 estimation is an improvement from the $1.4 trillion deficit in 2009, the U.S. is far from solving its deficit problem. According to the Economist, the U.S. debt is too high – federal debt was 73 percent of the country’s GDP in 2012 – and entitlement reform must take place in order to safeguard the nation’s economic security. Unfortunately, no such resolution is in sight as Social Security is considered the “third rail” of American politics. Democrats particularly refuse to touch benefits despite the inevitability that rising health costs and the growing population of aging Americans will only continue to increase spending on entitlements.
President Obama acknowledged during his 2012 reelection campaign that Social Security and Medicare need to be reformed. He has yet to act on his observations, but the president insists that the AFA will not be a contributor to the deficit problem. In fact, that president holds that the health care legislation will reduce the deficit in coming years.
The Congressional Budget Office published a report in 2010 estimating that the legislation would reduce the deficit by $100 billion in the first ten year after its passage. In the second decade, the CBO estimated the deficit would be reduced by over $1 trillion.
The problem with taking the CBO’s report at face value is that it assumes the “law would be adhered to exactly as written.” Given the scope of the health care legislation, the odds of this being the case are nil. Already changes are being pushed that would reduce revenue generated by the law.
Reports competing with that of the CBO that account for more pessimistic possibilities of the law’s future provide a drastically different and (given the historic paths of entitlement programs), a more believable prediction of Obamacare’s impact on federal spending. One report estimated that the law will raise the deficit by $500 billion in the first ten years and $1.5 trillion in the following decade.