Ryan Calls PPACA a “Fiscal Train Wreck”

January 6, 2010 (PLANSPONSOR.com) – The Congressional Budget Office (CBO) may think repealing health care reform would cost billions, but a prominent Republican says it’s a “fiscal train wreck.”

Congressman Paul Ryan (R-Wisconsin), Chairman of the House of Representatives Committee on the Budget, took issue with claims about the costs of the Patient Protection and Affordable Care Act (PPACA), including numbers produced by the CBO.  The CBO prepared a letter to new Speaker of the House John Boehner (R-Ohio), asserting that repealing the health care legislation would widen the federal budget deficit over the period 2012 through 2019 (see CBO: Repealing Health Care Law Would Increase Federal Deficits).  The non-partisan agency said it was providing a preliminary analysis because Congressional deliberations on H.R. 2, the Repealing the Job-Killing Health Care Law Act, could begin very soon (see GOP Announces Plans to Repeal Health Care Law).    

However, Ryan said that those claims of deficit reduction don’t accurately assess the actual costs of the legislation.  In a press release, he said that while the CBO “must score what is put in front of it,” he also noted that “once these gimmicks are accounted for, the bill would add over $700 billion in red ink over the next decade, as health-care costs send the debt spiraling out of control”.

According to Ryan, the score double-counts $521 billion from Social Security payroll taxes, CLASS Act premiums, and Medicare cuts, and “strips a costly doc-fix provision that was included in initial score”.  Moreover, Ryan noted that the scoring “measures 10 years of revenues to offset 6 years of new spending”.

Ryan noted that claims of deficit reduction often cite figures from the Congressional Budget Office, which reported last year that despite $2.6 trillion in new spending, the legislation as written would reduce deficits by $143 billion over ten years (see http://www.cbo.gov/ftpdocs/113xx/doc11379/AmendReconProp.pdf). 

However, he noted that the CBO score “did not include the cost of setting up and administering the massive overhaul, including the cost of hiring new health-care bureaucrats to run the new spending programs, as well as thousands of IRS agents to enforce the new mandates,” and that accounting for these discretionary appropriations would add $115 billion to the bill’s ten-year cost, “all but wiping out its alleged “savings.”

Ryan also noted that the new law “double-counts” an estimated $521 billion in alleged offsets; that Social Security will receive an additional $53 billion in higher payroll tax revenue as a result of the new law – and that, “rather than setting aside this revenue for promised Social Security benefits, the bill spends it on new subsidies” (see http://www.cbo.gov/ftpdocs/113xx/doc11355/hr4872.pdf).  

He noted that while the health care legislation originally included the “doc fix” that CBO estimated would add $208 billion to the bill’s score, “Democrats removed this provision to lower the bill’s CBO score, but promised doctors that they would enact the fix later, and did in fact pass a short-term prevention of cuts to physician payments last year, adding to the deficit”.

As a result, Ryan said “Add it up – $115 billion in discretionary costs, plus $521 billion in double-counting, plus $208 billion for a long-term doc fix (minus the $143 billion of claimed savings) – and the law would add $701 billion to the deficit over the next ten years”.

Beyond the 10-year period in question, Ryan cautioned that “the law creates a brand new open-ended health care entitlement that will – unless repealed – exacerbate the spiraling cost of health care, explode our deficit and debt, and forever alter the relationship between the government and the American people”.

More information is available at http://budget.house.gov/healthcare/