Is Romney right on 'Obamacare?' Depends how you count

October 9, 2011
Is Romney right on 'Obamacare?' Depends how you count
By David Lightman | McClatchy Newspapers

WASHINGTON — Mitt Romney is adamant: "I will press for full repeal of 'Obamacare,' which will save hundreds of billions of dollars."

But the nonpartisan Congressional Budget Office — whose data the campaign has cited as the source of its assertion — says that the 2010 federal health care law should cut deficits $210 billion from 2012 to 2021.

The bottom line: "It's actually not known who's right," said Amitabh Chandra, economist and professor of public policy at Harvard University.

"If the law goes through as it is, it will save us money," he said. But what if Washington lawmakers — as they often do — balk at implementing some of the cost-savings features, such as higher taxes or dramatic cuts in Medicare?

There go the big savings.

"Congress has a history of doing things like that," Chandra said.

The quandary over deciding who's right is typical when trying to evaluate campaign assertions. It's difficult to say whether Romney is accurate or exaggerating, although some analysts said that, at the least, he's using CBO's analysis selectively.

The agency is widely regarded as Capitol Hill's leading independent authority on the fiscal impact of legislation, and its reviews can only deal with current law.

"CBO estimates are always credible because of the organization's reputation for technical skill and lack of bias," said Paul Ginsburg, president of the nonpartisan Center for Studying Health System Change.

"CBO has studied this a lot more than Romney has, so I'll go with CBO," added Augustine Faucher, director of macroeconomics at Moody's Analytics, a West Chester, Pa.-based research firm.

Not everyone agreed.

The accuracy of CBO's numbers "depends on whether you want to reduce the deficit on paper or in reality," said Kathryn Nix, health care policy analyst for the conservative Heritage Foundation.

"Think about the assumptions that go into that (CBO) study and what's likely to happen in real life. This law is going to explode the deficit."

Romney, the former Massachusetts governor considered a front-runner for the Republican presidential nomination, made his assertion in a Sept. 29 op-ed article in the New Hampshire Union Leader.

Asked for the campaign's source, spokesman Ryan Williams cited a March 30 CBO report that projects the bill will increase spending by $417 billion between 2012 and 2019 and by $604 billion between 2012 and 2021.

Williams cited Table 1 of the CBO report — but the campaign didn't mention that in that same table, CBO estimated that the law is expected to generate $536 billion in revenue from 2012 to 2019, and $813 billion from 2012 to 2021.

As a result, CBO says on the same page, the law will "reduce federal deficits by $210 billion over the 2012-2021 period," and cites Table 1 as its source.

Williams countered that CBO's conclusion is "based on unrealistic accounting gimmicks added to the bill by Democrats so that they could support their own talking point even as they blew an unprecedented hole in the federal budget."

That view has been hotly debated among analysts.

"Romney is playing with numbers to scare people," said John Holahan, director of the Health Policy Center at the Urban Institute, a research group. But Nix concluded that CBO is making "unlikely assumptions" based on "budget gimmicks included in the legislation."

Romney has made repealing the 2010 health care law, which would require nearly everyone to obtain health coverage by 2014, a centerpiece of his presidential campaign.

His opposition to the law, which most Republicans abhor because they see it as big government run amok, is an important talking point for Romney, since as governor of Massachusetts he signed into law a state health care plan widely considered a model for the federal law.

By 2021, according to CBO, about 95 percent of nonelderly legal residents in the United States will have insurance coverage, compared to the current 83 percent.

Romney says that Washington should not be dictating such health care policies, and each state should be free to enact a health care policy that suits it best.

At least two parts of the law cause analysts to be skeptical of estimating its cost or savings.

Foremost is Medicare. The health care law assumes about $500 billion will be saved in Medicare costs over the next 10 years.

The biggest obstacle to achieving those savings could be political. The 46-year-old health care program has been notoriously difficult to touch politically, since no one wants to be accused of shortchanging seniors' care.

The law takes several steps to reduce Medicare's growth, including curbs on hospital readmissions. And it creates the Independent Payment Advisory Board, a full-time, presidentially-appointed panel that will recommend ways to cut Medicare.

But lawmakers over the years have been reluctant to impose severe provider cuts. For years, Medicare spending on physicians and other health-care providers was supposed to be limited by a set schedule. But because of political pressure, as well as a fear that physicians would stop accepting Medicare patients, Congress blocked the scheduled cuts from taking effect.

In 2011, for instance, payments were supposed to drop 25 percent, but in December, Congress approved spending $15 billion to keep the rates intact.

That's likely to happen again, said some analysts. "Pretending it will not happen won't reduce the deficit," said Nix.

Revenue is another major variable in any analysis. Some of the funding is supposed to come from a tax on insurers of high-end employer-sponsored health plans.

For about 30 years, Republicans have been reluctant to increase any taxes. While no one knows which party will control Congress or the White House in 2018, the year the tax takes effect, there's likely to be a push for changing the provision.

To the Romney campaign, such variables help make the case that the health care law is a "catastrophe," as Williams put it.

But while there are certainly variables, said Holahan, "I'd put my money on the CBO estimates."

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