Rep. Darrell Issa (R-CA) has an op-ed in today’s Politico in which he argues that the Congressional Budget Office underestimated the cost of the Affordable Care Act by an incredible $1 trillion dollars:
Beginning in 2014, tens of millions of employees will be eligible for these new subsidies. Many already have access to health insurance through their employers but are likely to find it more advantageous if this insurance is dropped, and they can instead have taxpayer health care subsidies and slightly higher wages.
While this creates a win-win for the employer and worker, it creates a lose-lose for the nation’s credit rating and taxpayers. Holtz-Eakin has calculated that previous projections may have underestimated Obamacare’s 10-year cost by roughly $1 trillion.
Issa argues, via former CBO director Douglas Holtz-Eakin, that employers will drop coverage because the cost of providing insurance is more than the penalty for not offering it and that workers will simply gravitate toward more affordable government-subsidized plans. But this argument doesn’t account for the increased compensation employers would have to provide to their employees if they stopped offering insurance or that employees “who have a coverage offer from their employer are not eligible for premium tax credits unless the coverage offered is seriously deficient.” As the Urban Institute explains, “[T]here is little scope for firms being able to save money from dropping ESI [employer sponsored coverage] coverage except perhaps in firms where most workers have low wages as well as low family incomes, and these types of firms are the least likely to offer ESI today.” Note that Holtz-Eakin’s estimates is on the very periphery of other studies of employer dumping:
But what’s really astounding is that Holtz-Eakin would produce a $1 trillion figure — a number so large that it seriously questions the competency if not the sanity of the actuarial office he used to manage.