Experts Reject Study From Koch-Backed Center Claiming Health Care Law Will Increase Deficit

Original Link: http://mediamatters.org/research/201204110009

Right-wing media are touting a study claiming the health care reform law will not lower the deficit, but rather increase it by more than $300 billion. In fact, economic experts dismissed the study by conservative analyst Charles Blahous, saying it uses "discredited arguments."

Study Claims Health Care Law Will Add More Than $300 Billion To Deficit

Study: Health Care Law "Is Expected To Add At Least $340 Billion And As Much As $530 Billion To Federal Deficits." According to a study by the Mercatus Center at George Mason University:

The Affordable Care Act (ACA) enacted in 2010 will significantly worsen the federal government's fiscal position relative to previous law. Over the years 2012-21, the ACA is expected to add at least $340 billion and as much as $530 billion to federal deficits while increasing federal spending by more than $1.15 trillion over the same period and by increasing amounts thereafter. These adverse fiscal effects are not everywhere understood because of widely circulated analyses referencing scoring conventions of the Congressional Budget Office (CBO) and the Medicare Trustees, which compare the health care reform legislation to a baseline scenario that differs from actual law.
Moreover, there is substantial risk that the ACA's costsaving provisions will not be enforced as currently specified. To avoid worsening the federal fiscal outlook, legislative corrections are required before the ACA's provisions become fully effective in 2014. Roughly two-thirds of the law's subsidies for health insurance exchanges must be eliminated to avoid worsening federal deficits and the entirety of their costs eliminated to avoid further increasing federal health care financing commitments. [Mercatus Center, 4/10/12]

Study Author Blahous: Conventional Health Care Analyses Involve "Double Counting" Of Proposed Medicare Savings. From The Washington Post:

President Obama's landmark health-care initiative, long touted as a means to control costs, will actually add more than $340 billion to the nation's budget woes over the next decade, according to a new study by a Republican member of the board that oversees Medicare financing.
The study is set to be released Tuesday by Charles Blahous, a conservative policy analyst whom Obama approved in 2010 as the GOP trustee for Medicare and Social Security.
[...]
"Does the health-care act worsen the deficit? The answer, I think, is clearly that it does," Blahous, a senior research fellow at George Mason University's Mercatus Center, said in an interview. "If one asserts that this law extends the solvency of Medicare, then one is affirming that this law adds to the deficit. Because the expansion of the Medicare trust fund and the creation of the new subsidies together create more spending than existed under prior law."
[...]
Blahous acknowledged that his analysis departs from budget conventions, which, he said, make sense for the most part. He said that in this case, however, those rules do not fully illuminate the financial impact of the health-care law, since they permit what conservative critics have dubbed a "double counting" of proposed Medicare savings. [The Washington Post, 4/9/12]

Mercatus Center Is A Koch-Funded Organization

Koch Foundation: Mercatus Center Has Been A Charles Koch Foundation Grant Recipient "For More Than 25 Years." From the Koch Family Foundations website:

For more than 25 years, the Mercatus Center at George Mason University, a Charles Koch Foundation grant recipient, has sought to bridge the gap that often exists between economic understanding and real-world decision-making. Mercatus applies scholarly research to problems facing policy makers. Bringing together a global network of scholars and experts, Mercatus provides policy makers with the economic tools to make sense of today's most pressing issues. [Koch Family Foundation, accessed 4/11/12, via Think Progress]

Right-Wing Media Echo Report's Claim Of "Double-Counting"

Fox Business Host Gerri Willis: "Blahous Shows The White House Is Double-Counting Some Of Its Savings." After echoing the study's claim that the health care law will add at least $340 billion to the deficit, Gerri Willis said: "All along, the administration has maintained the expansion of coverage for 32 million uninsured Americans could be paid for by raising taxes and cutting payments to Medicare providers. But Blahous shows the White House is double-counting some of its savings." [Fox Business, The Willis Report, 4/10/12]

Drudge Headline: "Obamacare Explodes Deficit." The Drudge Report linked to the Washington Post story with the following headline, "Obamacare Explodes Deficit":

[Drudge Report, 4/10/12]
Fox Nation: "White House Can't Refute New Obamacare Cost Study." Fox Nation highlighted the study in a post that included the White House's refutation of Blahous' study using the headline: "White House Can't Refute New Obamacare Cost Study."