Published for economics21.org, June 29th, 2012

It is quite possible that this week’s Supreme Court ruling has just changed the 2010 health care law in such a way that it will add substantially to federal deficits from almost any vantage point. We will know more after the Congressional Budget Office completes its analysis.

Let’s review the background. CBO’s last complete score of the health care law, in March 2011, found that it would reduce federal deficits by $210 billion from 2012-2021. That was before the suspension of the CLASS program provision, which takes the positive score down to $123 billion. As I pointed out in my recent study, those scores are not relative to actual prior law but to a hypothetical budget baseline scenario that CBO uses under the procedures of the Deficit Control Act. Relative to actual prior law, by contrast, the health law — had it been upheld in its entirety — would add more than $340 billion to federal deficits over the next ten years.

Let’s nevertheless reference the positive score of $123 billion here since, flawed or not, it’s what arises under Congress’s scorekeeping rules. If this week’s ruling worsens the bill’s budget impact by more than $123 billion over ten years, then the legislation adds to federal deficits even by the standard adopted by its proponents. Will this score remain positive after the Supreme Court ruling?

The Supreme Court left intact most of the health care law’s provisions, excepting only one section that would have allowed the Secretary of HHS to withdraw “existing Medicaid funding” from states that fail to comply with the law’s expansion of Medicaid eligibility.

Full post here

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