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  • New Analysis Reveals Obamacare Will Cost More Than Expected

    When Obamacare was passed into law, its proponents touted the Congressional Budget Office’s analysis showing that it would reduce the deficit. A lot has changed since then. Heritage research reveals that “a close examination of what CBO said, as well as other evidence, makes it clear that the deficit reduction associated with [Obamacare] is based on budget gimmicks, sleights of hand, accounting tricks, and completely implausible assumptions.”

    Now, a recent hearing held by the House Energy and Commerce Subcommittee on Health has further revealed that the cost of Obamacare will be higher than expected. Douglas Elmendorf, Director of the Congressional Budget Office, highlighted that CBO’s March 2011 updated analysis of the health care legislation shows its coverage provisions costing $1.1 trillion between 2012 and 2021. This is $90 billion more than the prior month’s estimates for the same time period.

    When the law was first enacted, the CBO estimated that its coverage provisions would have a gross cost of $778 billion from 2011 to 2019. As Elmendorf pointed out, the difference in cost estimates is based on the fact that they look at different time periods. This reveals one of the budget gimmicks used to downplay the true cost of Obamacare. Former CBO Director Douglas Holtz-Eakin pointed out that the law appeared less costly in its first decade because it “front-loads revenues and backloads spending.” He explained further that “the taxes and fees [Obamacare] calls for began immediately in 2010, but its new subsidies are largely deferred until 2014. This contributes to the illusion that [Obamacare] reduces the deficit.” The true 10-year cost of Obamacare will be apparent only once CBO is able to score a full 10 years of both revenue and spending changes under the new law.

    Furthermore, CBO estimated last year that 16 million additional individuals would be covered under Obamacare’s expansion of Medicaid. However, Medicare’s Chief Actuary, Richard Foster, told the subcommittee that he believes that as many as 24.7 million people will be added to Medicaid.

    Foster explained that the reason for this significant adjustment is that the “original estimate for the increase in Medicaid outlays was based on an assumption that Social Security benefits would continue to be included in the definition of income for determining Medicaid eligibility. If a strict application of the modified adjusted gross income definition is instead applied, as is now expected, then an additional 5 million or more Social Security early retirees would be potentially eligible for Medicaid coverage.”

    Finally, under Obamacare, low- and middle-income Americans who are unable to obtain employer-sponsored insurance will be eligible for federally subsidized coverage through the new health exchanges. According to CBO, 19 million Americans will receive subsidies. But analysis by Holtz-Eakin shows that reliance on the subsidies could increase to as many as 35 million Americans because of the perverse incentives in Obamacare for employers to dump coverage altogether.

    Eakin told the committee:

    Consider a $12,000 policy in 2014 of which the employer would bear roughly three-quarters of $9,000. A simple comparison of $9,000 in savings versus a $2,000 penalty would seemingly suggest large-scale incentives to drop insurance.

    At a time when Congress is fighting to control runaway federal spending, Obamacare will result in higher deficit spending in the future. Holtz-Eakin called the health care overhaul “the wrong economic policy at a pivotal moment in U.S. economic history.” To avoid further unsustainable government spending, Obamacare must be repealed.

    This post was co-authored Amanda Rae Kronquist and Meera Yogesh, members of The Heritage Foundation Young Leaders Program.

    Posted in Obamacare [slideshow_deploy]

    10 Responses to New Analysis Reveals Obamacare Will Cost More Than Expected

    1. GotFreedom says:

      This is no surprise–we, the average Americans, who have been engaged in the fight against "Obamacare" have known from the start that this would cost more than they said! Why is it that we knew it but those in Washington did not (which of course is not completely true–they knew full and well exactly how much this was going to cost and didn't give a hill of beans about it)!

    2. Nicolas Loris Nicolas Loris says:

      Great read!

    3. Kevin H, college par says:

      This is a far better proposal than what Ryan has suggested – which is privatizing Medicare and turn it into a voucher program for insurance companies. Already CBO shows cost to seniors will more than double. Privatizing Medicare is a disaster.

    4. Bobbie says:

      money is never an option when corruption is. the cost may never be known to the fullest until it's too late. Please get rid of this terrible cruelty to America. It isn't worth the burden of 30million.

    5. Werner Koch,SLO Coun says:


      Congress and the White House should stop wasting the people’s money. There are many ways to “cut as detailed herein” and use savings to improve quality of basic invested entitlements. Congress should transition to an improved Medicare. Vote opponents to this “out”. Citizens come first.

      It is time the U.S. reduces 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. Examples are fewer forces in, Bosnia, Germany, Philippines and Okinawa.

      Starting with Iraq, only train for self reliance. After the surge in Afghanistan train and diminish corruption by requiring accounting practices for aid, substituting minerals mining and food crops for drugs. Its time for both to pay for military supplies and consulting.

      Cut bloated federal bureaucracy and expenses. Combine CDC, EPA and FDA. Combine the FAA, NHTSA and DOT. Combine GAO and CBO. Eliminate “must spend all”. Return “unused” yearly budget to the treasury. Cut budgets (other than entitlements) on an average of 10%. Implement GAO’s report to Congress on eliminating duplication, overlap and fragmentation in 81 of the federal government’s departmets, agencies, programs, offices and initiatives.

      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. Stop “multi million dollars per day” presidential-family foreign trips.

      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 $8.7 billion of development funds not accounted for. Halt $150 million aid to Palestinians. Slash $1.3 billion annually to Egypt.

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

      Congress should reduce “stimulus” expenditures by halting over budget and vote bribery “earmarks”. Example: Stop “cow burp” study. Take back $13 billion unspent in states. Eliminate subsidies that smell “earmark”. Congress should cut its pay and do not pay student loans for their staff. Please- no renting of private or military aircraft. An example was Pelosi’s family of $2.1 million for over 2 years. Congress should set commercial travel cost standards and controls.

      Reduce medical cost by: allowing purchasing anywhere in U.S., “tort reform”, and reducing “red tape”. Reduce Medicare fraud by expediting billing cost speed, and doctor/patient screening of local provider groups.

      Congress should enforce existing immigration laws and implement “no illegal birthrights”. Entitlements or benefits should be for only citizens. Deport criminal “illegals”. Only deportees and workers on Visa/Guest Programs qualify for needed medical benefits. Complete an improved fence. 56% of this border is uncontrolled.

      Corporations should be allowed tax reduction incentives for hiring with healthcare plan options.

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

      Healthcare quality can 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 pre-existing conditions, and no deductibles and co-pays except for extended skilled level nursing.

      Other benefits are aid for unemployment compensation and Social Security with reinstated cost of living increases.

    6. Pingback: Brace for Larger Deficits as Lawmakers Rethink Health Care Law’s Medicare Cuts | The Conservative Papers

    7. Pingback: Brace for Bigger Deficits as Lawmakers Rethink Medicare Cuts | The Foundry: Conservative Policy News.

    8. Pingback: Brace for Larger Deficits as Lawmakers Rethink Health Care Law’s Medicare Cuts | Fix Health Care Policy

    9. Pingback: that hero » Obamacare Still an Awful Idea

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