NCPA - National Center for Policy Analysis

The GOP's Fiscally Unsound Health Proposals

July 22, 2015

The Congressional Budget Office estimated that repealing Obamacare would increase the federal deficit by $353 billion over ten years. Factoring in such growth, the deficit would still rise by $137 billion. So if Republicans repeal Obamacare, they would still have to cut $137 billion of spending.

Yet the Republicans have not even proposed minuscule spending cuts to pay for their current health-related bills. Their latest lapse involves the medical-device excise tax. This is a 2.3 percent tax on medical devices to help pay for Obamacare. The CBO estimates that device-tax repeal will increase the deficit by $24 billion in the next ten years. Spending offsets? Zero. Nada. Zilch, says senior fellow John Graham of the National Center for Policy Analysis.

This episode is the second time in 2015 that the Republican-majority Congress has voted to increase deficit spending on health care. In April, they jacked up Medicare spending on physicians' fees -- winning the praise of physician lobbyists. At least that time around, they found a few pennies on the dollar to pay for the increase. Still, the CBO estimates the so-called Medicare "doc fix" will add $141 billion to the cumulative ten-year deficit.

President Obama himself has proposed a way to cut Medicaid spending that should appeal to conservatives. He proposed reforms to "provider taxes." Because the federal government automatically matches (or, in most states, more than matches) each dollar the state pays for Medicaid, hospitals and state politicians have figured out a neat trick to maximize federal payments.

Congress could stop this abuse and thereby save $22 billion over ten years. All it has to do is use the Medicaid proposal from President Obama's 2012 budget, and it would pay for almost all of the revenue lost from repealing the medical device tax.

Source: John R. Graham, "The GOP's Fiscally Unsound Health Proposals," Real Clear Policy, July 16, 2015.


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