New FactCheck Article: A 'Budget Busting' Law?

A ‘Budget-Busting’ Law?

Republicans and Democrats both misrepresent the fiscal effect of the health care law.

January 19, 2011

Summary

The nonpartisan Congressional Budget Office states that repealing the health care law would worsen the federal deficit over the next 10 years — by $230 billion.
So how does the House Republican Leadership support its claim that the law itself is "budget-busting" and would add $701 billion to the deficit? And how does Democratic Rep. Nancy Pelosi justify claiming it will "save taxpayers $1.3 trillion"? Both sides are spinning shamelessly.
We judge that CBO’s projection, which is both official and nonpartisan, is the best available. But even that estimate is uncertain, as the agency itself concedes. For one thing, there is doubt about whether all of the Medicare savings in the law will actually materialize. Those reductions are supposed to offset part of the law’s new spending, but they could put too great a burden on hospitals.
Pelosi’s $1.3 trillion claim is deceptive. She’s projecting CBO’s estimate 20 years into the future, something the agency says is an imprecise and uncertain calculation. Furthermore the law raises taxes to pay for much of its new spending, so saying it "saves taxpayers" anything is misleading. Her figure is actually a reduction in the projected federal deficit.
As for the GOP’s claim that "the bill would add over $700 billion in red ink over the next decade," we judge it to be mostly bogus.

• It rests largely on a claim that hundreds of billions of dollars in projected Medicare savings are being "double-counted." But CBO is simply not doing that.
• The GOP’s $700 billion figure also includes more than $200 billion for a permanent "doctor fix" to prevent a cut in Medicare payments to doctors. But that is not even a part of the new law, and many Republicans endorse the "doctor fix" anyway.
• The GOP claims the law will cost $115 billion to administer, but that isn’t true. CBO actually puts those costs at roughly $10 billion to $20 billion over the next 10 years.