One expert sees deficit growing under health law

  • Updated: April 10, 2012 - 7:37 PM

President Obama's 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 member of the board that oversees Medicare financing.

The study, released Tuesday, is by Charles Blahous, a conservative policy analyst whom Obama appointed in 2010 as one of two public trustees for Medicare and Social Security. His analysis challenges the conventional wisdom that the health care law, which calls for an expensive expansion of coverage for the uninsured beginning in 2014, will nonetheless reduce deficits by raising taxes and cutting payments to Medicare providers.

The 2010 law does generate both savings and revenue. But much of that money will flow into the Medicare hospitalization trust fund - and, under law, the money must be used to pay years of additional benefits to those who are already insured. That means those savings would not be available to pay for expanding coverage for the uninsured.

"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."

Administration officials dismissed the study, arguing that its "new math" departs from bipartisan budget rules used to measure every major deficit-reduction effort for the past four decades.

WASHINGTON POST

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