The CBO's main estimate includes another important assumption that changes the outcome substantially. In calculating how Congress would rescind the law’s Medicare cuts, the CBO assumed Congress would use a formula less favorable to hospitals. If Congress used a formula more favorable to hospitals, the CBO said, repeal would increase the deficit by an additional $160 billion over 10 years — that is, on top of the higher deficits the CBO already expects.
Despite including “dynamic scoring”, the report finds, unambiguously, that Obamacare reduces the deficit and repealing it would enlarge the deficit.
Is there anything in the report that provides fodder for the opponents? I see that the Times report says that there are “mixed effects”, because CBO says that GDP would be higher if the ACA were repealed. And maybe the usual suspects will try to spin it that way.
But the truth is that this report is much, much closer to what supporters of reform have said than it is to the scare stories of the critics — no death spirals, no job-killing, major gains in coverage at relatively low cost.
And there’s another important point: while the ACA may lead to somewhat lower GDP because it reduces labor supply, this does not imply a one-for-one loss in welfare. Suppose that a family’s second earner, now assured of being able to get health insurance, chooses as a result to work shorter hours and spend more time taking care of the children. GDP goes down — but there is a compensating non-monetary gain.
In fact, in a perfectly competitive economy the gain would fully offset the fall in GDP: if workers are paid their marginal product, the fall in GDP from the ACA is equal to the lost wages, but workers choosing to work less clearly prefer to have the extra time to the extra wages. Or to put it a bit differently, other things equal it’s agood thing if workers, freed from the fear that they won’t be able to get health insurance, respond by voluntarily working less.
OK, the story is made more complicated by taxes, which place a wedge between wages paid and income received; so there probably is a net cost to a fall in labor supply. But this effect is fully captured by the loss in revenue, which CBO doesn’t think would be large.
So overall this isn’t at all a “mixed” report — it’s a very big win for Obamacare supporters.