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Don’t Be Fooled - House Health Care Bill Would Raise Long-Term Deficits

Posted By Brian Riedl On July 20, 2009 @ 4:50 pm In Economics | Comments Disabled

Contrary to several reports, the House Democratic health care bill (H.R. 3200) is not deficit-neutral, but would raise deficits to alarming new levels over the long term. It would do this by relying on several old warhorse budget gimmicks. According to the Congressional Budget Office [1] (CBO), H.R. 3200 would increase the budget deficit by $239 billion over ten years – that’s right, increase. And that’s even before these gimmicks:

1st Gimmick – Fiddle with Implementation Dates: True, the bill runs surpluses initially. Why? Because the tax hikes proposed to pay for the new program [2] would begin in 2011, but the spending would be not start until 2013. This same thing happened with the Medicare drug benefit debate – lawmakers simply delayed implementation by two years in order to reduce the ten-year cost. Of course, this gimmick did not reduce the program’s true cost once fully implemented. So claims of deficit neutrality are hollow.

2nd Gimmick – Ignores Long Term Costs: The President has repeatedly stated that he would not support health care without long-term savings. Yet this legislation – and others – fails to include any formal analysis of its long-term costs. Once the bill’s new healthcare spending is fully implemented, however, it would run expanding budget deficits that reach by $65 billion annually by 2019. Moreover, this initial CBO analysis significantly understates the long term cost. Extrapolating these trends, the bill could run budget deficits of approximately $800 billion total in its second decade, and even much more thereafter. Before lawmakers pass along huge new debts to America’s younger generations, they really ought to know how big they are going to be.

Deficit-neutral? I don’t think so.


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URL to article: http://blog.heritage.org/2009/07/20/don%e2%80%99t-be-fooled-house-health-care-bill-would-raise-long-term-deficits/

URLs in this post:

[1] Congressional Budget Office: http://www.cbo.gov/ftpdocs/104xx/doc10464/hr3200.pdf

[2] proposed to pay for the new program: http://www.heritage.org/Research/Taxes/wm2544.cfm

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