• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Even CBO Is Skeptical of Obamacare

    Congressional Budget Office (CBO) Director Douglas Elmendorf recently spoke at the University of Southern California about the economic impact of Obamacare. He predicts that Obamacare will further depress the nation’s employment picture.

    CBO’s analysis of Obamacare predicts that it will reduce the amount of labor being used in the economy by roughly half a percent. Elmendorf states that this impact will be small, but in reality the impact is small only in relative terms. For instance, a half-percent loss in jobs in the American economy today would translate into about 750,000 additional Americans losing work.

    The reason for the job loss is twofold. First, Obamacare raises costs on businesses with additional mandates and taxes, which will negatively impact hiring. Second, Obamacare increases the social safety net with a massive Medicaid expansion and generous subsidies to purchase insurance. This increases implicit marginal tax rates and discourages work.

    Elmendorf’s recent remarks focus on the impact Obamacare will have on lowering the amount of unnecessary spending on health care. The answer appears to be no as CBO projects that health care spending will be at least 25 percent of GDP by 2035, up from 17 percent today.

    CBO projects that health care spending will increase by around $800 billion between 2014 and 2019 because of Obamacare. Over the next decade, Obamacare is projected to reduce the federal budget deficit, primarily because of substantial Medicare cuts, large tax increases, and net revenue from the CLASS Act scheme. However, these projections are dependent on the key assumptions that CBO made regarding how individuals will react to the legislation and the political feasibility of certain components of the law taking effect. CBO’s “score” of the bill could be very different if the assumptions CBO made prove to be erroneous.

    In his recent remarks, Elmendorf goes beyond the 10-year purview of the CBO’s budget “score” time frame to look at the long-range impact of Obamacare on health care spending. He expresses doubt that the new health care law can drive efficiency improvements and reduce wasteful spending.

    Elmendorf’s skepticism is based in sound reasoning. It is very difficult for government to enact regulatory changes in order to drive efficiency improvements. An alternative to relying on government to improve efficiency is to utilize market forces. In general, market forces lead to improvements in products and lower prices. A key problem in health care is that only about 10 percent of the dollars used to purchase health care are controlled by patients at the point of service. Instead of dealing with the root of the problem, Obamacare expands government’s role in the provision of health care. Government’s track record at improving quality and lowering prices does not inspire confidence that the new health care law will work as intended.

    Posted in Obamacare [slideshow_deploy]

    5 Responses to Even CBO Is Skeptical of Obamacare

    1. Lan Astaslem, So. FL says:

      The last time the government facilitated efficiency in any industry is when Hoover standardized mattress sizes.

      One of the benefits to the Republicans re-taking the House is thay can now have the CBO re-do all their prior impact statements using reality-based assumptions.

    2. W.P Koch,San luis Ob says:


      Congress and the White House should stop squandering the people’s money and use savings to improve quality of basic invested entitlements. Preserve the 2010 tax schedule. Congress should improve basic Medicare. Vote opponents to this “out”. Citizens come first.

      It is time the U.S. reduces its human rites and police activities for the World by lobbying the United Nations, NATO and Interpol to “take on more”. 800 bases in 63 countries across the world should be reduced. Starting with Iraq, continue training for self reliance. After a surge in Afghanistan repeat above and remove corruption starting with monitoring accounts, substituting minerals mining and food crops for drugs. Decrease forces in selected areas such as Germany, Bosnia and Okinawa.

      Cut bloated federal bureaucracy. Combine CDC, EPA and FDA. Combine the FAA, NHTSA and Transportation Department. Combine GAO and CBO. Phase in outsourcing. Departments should eliminate “must spend all”. Return “unused” yearly budget to the treasury.

      Eliminate all 32 CZARS Mr. president. Reduce your 469 member staff which makes nearly 39 million per year! Halt first lady $180,000 air force one vacation trips. Cancel $ 20,000,000 executive order ( HB 1388) to relocate key Hamas members to U.S.

      Contribute to only one of: The World Bank or International Monetary Fund or U.S. Agency for International Development.

      Reduce foreign aid bribery. For example, no aid to oil rich -Iraq. $37 billion and increasing with $8.6 billion of Iraq development funds not accounted for.

      Charge bailed companies (TARP) for their huge executive bonuses at taxpayer expense. Government should sell its shares to recoup for taxpayer. About $154 billion owed.

      Congress should reduce the “stimulus” and monetary expenditures by halting: over budget projects, non relevant earmarks and vote bribery. Do not pay student loans for congressional staff. Please- no private or military jets for congress including Pelosi’s family at taxpayer expense. $2.1 million for Pelosi over 2 years. Congress should set commercial travel cost standards and controls.

      Reduce medical cost by: allowing purchasing from any U.S. corporation, “tort reform”, and reducing “red tape”. Trace funds to local medical groups for expediting billing cost speed, doctor/patient verification and fraud reduction.

      Federal government should enforce existing immigration laws. Complete the improved fence. Entitlements or benefits should be for only citizens. Deport criminal “illegals”. Only workers on a Visa Program qualify for needed medical benefits

      Improve medical expense tax deduction for citizens reaching age 65. Provide corporations tax reduction incentives for hiring with healthcare.

      The savings will improve funding for:” Medicare”, “Medicaid, and “Veteran’s Affairs”.

      Healthcare quality should be at least that for Congress or the Federal Employee Health Benefits Program (FEHBP). Additional benefits are: dental coverage, improved visual coverage, no drug “donut hole”, no deductibles and co-pays except for extended skilled level nursing.

      These actions will allow aid for unemployment compensation and Social Security with reinstated cost of living increases.

    3. bill bradshaw, wyomi says:

      the democratic party is actually the LAWYERS PARTY 100% of the campaign contributions from the Lawyers association went only to the democartic party

      the only problem with healthcare is the friviolous lawsuits pushing up insurance and operating costs

      so with the lawyers party in control u can only imagine that they will not fix the problem but white wash us down the drain

    4. Kelly Mortenson Mary says:

      Why is healthcare such a mega-industry in the first place? Because of what they've done with the food industry. It can't sustain health within the human body. 1) They've stripped the farm soil of it's nutrients. 2) They've pumped it up with chemical fertilizers, pesticides, herbicides etc. 3) They've altered seeds into GMOs and this is what they stock our grocery stores with. 4) They've fed this man-made junk to live stock (as well as pumping them up on steroids and vaccinations with God only knows what in them) and this is what we have to select from our local meat-stand. 5) USDA food grading standards are SUB-standard to optimum health. 6) The list goes on and on. They've created a society that is needy for "helath-care" through greed and power-lust. They have tapped into the American wallet through fear-mongering and food manipulation… and I see only dimly (through a glass) as the Apostle Paul said. God only knows the full exent to which they have destroyed our chances for real wellness. For the love of God! We have got to resist this Obamacare!!

    5. Pingback: CBO Predicts Obamacare Will Cost 750,000 Jobs!

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.