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Blocking Health Care Overhaul Funds Would Add $5.7 Billion to Deficit, CBO Says

By Dena Bunis, CQ HealthBeat Managing Editor

March 10, 2011 -- The Congressional Budget Office (CBO) said that blocking funding for the health care law would mean some short-term gain—a cut in the deficit of $1.4 billion for the rest of the fiscal year. But it would add $5.7 billion to the deficit over a decade.

The CBO said all these numbers are "highly uncertain," however, because the reality would depend on how the Obama administration interpreted the defunding provisions of the fiscal 2011 spending bill (HR 1)—"in particular, how broadly or narrowly the administration would define what is meant by 'carrying out' the provisions of those laws."

The CBO analysis—in a five-page letter from Director Douglas Elmendorf to Rep. Denny Rehberg, R-Mont., chairman of the Labor-HHS-Education Appropriations Subcommittee—likely will have no practical effect, since the bill was defeated in the Senate, and any spending bill that defunds the health care law (PL 111-148, PL 111-152) would be vetoed by the president.

"When you cut through the budget tricks and accounting gimmicks, it turns out that common sense wins the day," Rehberg said in a statement about the CBO letter. "When you strip away all of the spin, and warnings that defunding Obamacare this year would cost money, you're left with the truth: $1.4 billion in savings this year. Only in Washington would someone actually buy the claim that it costs money not to spend money." Rehberg did not reference the long-term $5.7 billion that would be added to the deficit if the law's implementation is blocked.

"Once again, Republicans have exposed their hypocrisy on reducing the deficit," said Rep. Pete Stark, D-Calif., ranking member of the Ways and Means Health Subcommittee. "In a bill they claim cuts government spending, the Rehberg Amendment would increase the deficit by $5.7 billion and create $1 billion in incorrect payments in Medicare."

The CBO and the Joint Committee on Taxation, Elmendorf wrote, expect that disallowing funding for the law would affect spending and revenues four ways:

  • It would delay the completion of such regulatory efforts as establishing payment rates for Medicare services provided during 2012.
  • It would delay the implementation of new programs.
  • It would prevent or delay providing money for grant programs.
  • It would reduce compliance with the tax code because regulations would not be written.

Health and Human Services Secretary Kathleen Sebelius referenced all those elements in a letter she sent March 7 to Senate Finance Chairman Max Baucus, D-Mont.
Sebelius' letter was slammed by congressional Republicans who said she was just trying to scare seniors into thinking that defunding the law would affect their Medicare benefits which, they said, were a subject of mandatory spending.

CBO letter (pdf)

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