On health care reform, Mitt Romney knows better

Republican presidential nominee Mitt Romney is stirring controversy with his equivocation over whether or not the individual mandate in the Affordable Care Act (ACA)—and hence the mandate in his Massachusetts health care reform, the model for much of ACA—is a tax or a penalty. But Romney was unequivocal about one thing in his response to the Supreme Court’s decision to uphold the ACA—and unequivocally dishonest—when he claimed: “ObamaCare adds trillions to our deficits and to our national debt, and pushes those obligations onto coming generations.”

This is patently false, and the former Massachusetts governor should know better. ACA is the most substantial piece of deficit-reduction legislation of the past decade, if not decades. Beyond the first decade, when ACA is gradually being implemented, health reform is projected to lower annual budget deficits by roughly half a percent of GDP, according to the Congressional Budget Office (CBO). Put in perspective, half a percent of projected GDP for 2022 is $125 billion; if ACA is fully implemented, we’re looking at well over $1 trillion of net deficit reduction in the second decade. Passage of ACA was the largest force driving CBO’s dramatic recent improvements in long-term public debt projections: between 2009 and 2010 (pre- and post-ACA enactment), their extended baseline projection for public debt in 2083 was revised sharply downwards from 306 percent of GDP to just 111 percent—a decrease of nearly two-thirds. Since those estimates, ACA is likely to produce even more long-term deficit reduction because the long-term care insurance program (CLASS Act) has been scrapped and some states may be sufficiently principled and foolish to refuse tens of billions of federal dollars for the Medicaid expansion. (Note: neither is a policy success in my book.)

Perhaps Romney is conflating government spending with debt, which would of course be nonsense. Yes, ACA will increase net government spending, but how else could one expand health insurance to some 30-33 million additional nonelderly adults? Expanding coverage and pooling risk also reduces costs per beneficiary in the long run by increasing the (less costly) provision of preventive care and decreasing uncompensated care costs, which are passed along to insurers and policy holders. And overall, ACA more than paid for itself by cutting government spending and raising taxes. But the administration failed to frame ACA as a monumental success for long-term deficit reduction, possibly because they didn’t want to acknowledge the excise tax on expensive (“Cadillac”) insurance plans and Medicare payroll tax surcharges on upper-income households. Indeed, the oddest part of Romney’s truth-challenged characterization of ACA’s fiscal impact is that the former Massachusetts governor’s allegation about running up debt immediately followed criticism that ACA cut Medicare and raised taxes by approximately $500 billion apiece over a decade—identifying roughly $1 trillion in deficit reduction.

Castigating ACA for cutting Medicare is particularly rich, given Romney’s embrace of Paul Ryan’s budget, which would turn Medicare into a voucher and cut related spending by trillions of dollars. The major piece of ACA that Ryan’s budget resolutions would not repeal are the roughly $136 billion in Medicare Advantage cuts—the cornerstone of conservatives’ hollow indignation that ACA cuts Medicare. But deflating the real value of the vouchers replacing guaranteed Medicare, shifting costs to seniors, is where Ryan and Romney would accrue real savings: By 2050, the Ryan budget would slash Medicare expenditure to 4¾ percent of GDP, down from 6½ percent under current law projections and 7¼ percent under current policy. Seniors would see their out-of-pocket costs soar, as Medicare spending per new enrollee in 2050 would fall by 35 percent and 42 percent, relative to current law and current policy respectively.

So despite achieving roughly $1 trillion in concrete savings and more than paying for itself, both near- and long-term, ACA somehow adds trillions of dollars to the public debt … by what rules of fiscal math? Stephen Colbert brought the word “truthiness” into the American lexicon—”the quality of preferring concepts or facts one wishes to be true, rather than concepts or facts known to be true.” Using purported concern with rising public debt to lambast ACA has more than a little truthiness to it.


  • benleet

    I’ve read this twice. It needs more clarity. I looked at an analysis by Jeff Madrick done in 2010 for the Ourfuture.org, the Citizens Commission Jobs, Deficits and America’s Economic Future. Madrick states: “If uncorrected, Medicare and Medicaid costs will exceed those of all other government spending in the next 25 years. When it comes to long-term deficit reduction, health care is the problem. Attempts to balance the budget merely by cutting the portion of these costs paid by government will fail, exacting an enormous human toll in the process.” (page 16) and a graph accompanies the paragraph showing government medical expenses, Medicare and Medicaid, quadrupling by 2082, dwarfing other costs. Mr. Fieldhouse, dumb down your article a little for readers like me.