The Congressional Budget Office underestimated the cost of Obamacare by $300 billion in its most recent report, in large part because it failed to account for the law’s impact on the job market, a new analysis of CBO data finds.
A 2010 CBO projection that Obamacare would reduce the deficit by $124 billion over ten years was changed in 2012 to $109 billion. But the new Senate Budget Committee Republican staff analysis of the 2012 data, incorporating new information and changes to the law, projects the law will actually add $131 billion to the deficit.
In 2014 the CBO analyzed for the first time what effects Obamacare will have on labor, and found that by 2024 the equivalent of 2.5 million full time workers will leave the job market as a direct result of the law. It also found wages, salaries and benefits will fall by 1 percent and the total number of hours worked will fall from 3.5 percent to 2 percent.
The Senate Budget Committee Republican staff estimated the loss of revenue from those effects of Obamacare to be $280 billion from 2017 to 2024. And when that number is incorporated into the CBO data, federal revenue from the law falls by $262 billion and accounts for most of the difference between the CBO and GOP staff projections.
Because an unexpectedly low number of people have signed up for Obamacare, the insurance coverage part of the law will cost $83 billion less than expected, the staff analysis found, but those savings are negated by $132 billion of federal health care savings that have disappeared.
President Obama promised he would not sign a health care law that added “a dime” to the deficit, and recently boasted that Obamacare is responsible for reducing the current deficit.
“Health care has long been the single-biggest driver of America’s future deficits,” he said in a speech at Northwestern University. “It’s been the single-biggest driver of our debt. Health care is now the single-biggest factor driving down those deficits.”
Senate Budget Committee Republican staff started with the CBO’s July 2012 projection, added two years so their projection would account for the current ten-year budget window and incorporated more recent adjustments and assessments to conduct their analysis.
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