Earlier this week, Medicare Trustee Charles Blahous, who also works for the Koch-funded Mercatus Center, published a study claiming the Affordable Care Act would add at least $340 billion to the federal deficit over the next decade. To produce the number — which contrasts sharply with the findings of the Congressional Budget Office — Blahous thew out the assumption that Congress will fund its entitlement obligations and instead pretended that “when the trust fund reaches its expiration, it would automatically cut benefits.”

But interestingly, Blahous made the exact opposte case to a caller concerned about the longevity of the program during his appearance this morning on Washington Journal:

CALLER: I’m on dialysis and if Medicare is done away with, then I won’t even be able to live because I can’t afford the treatment…I just wish you would rethink it because it helps me when I get dialysis. [...]

BLAHOUS: Well, this is obviously beyond a very compelling story that the caller just gave. This is actually very important to the point of my paper, which is that Medicare finances are a very important part of this whole equation. There is a bipartisan commitment at all times to upholding the solvency of Medicare. Now, one of the effects of the Affordable Care Act, is to extend the solvency…What does it mean for a situation like the callers? What it means is that the measures that the caller has to take in order to keep Medicare solvent are now somewhat relaxed moving forward because we’re showing Medicare to be solvent for eight additional years….So I would just say with respect to the viability of Medicare, you have a bipartisan commitment to upholding that…The caller should remain confident that the Medicare system will be kept solvent as it has for several decades.

Watch it:

In other words, he seems to be saying that once the trust funds run out, Congress will continue the spending that keeps the relevant programs going because our society has a demonstrated commitment to maintaining the social safety net for retirement, health care, and so forth. That honest answer comes from Blahous the Medicare trustee, not Blahous the Koch-funded analyst. As he himself admitted, “I certainly didn’t do [the study] wearing my hat as a Trustee.”

George W. Bush’s Social Security privatization guru Charles Blahous — who now works for the Koch-funded Mercatus Center — is out with a new report alleging that the Affordable Care Act adds $340 billion to the deficit. The new math relies on the old “double counting” meme — an argument advanced by Republicans in Congress in the final days of the health care reform debate alleging that the Congressional Budget Office (CBO) appropriated the same revenue for extending the solvency of the Medicare trust fund as it did for paying out benefits. The Washington Post’s Lori Montgomery explains:

“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.” [...]

Medicare is financed in part through a trust fund that receives revenue from payroll taxes. Before Obama’s health-care act passed, the trust fund was projected to be drained by 2017 (later updated to 2016). Absent the health-care law, Blahous writes, Medicare would have been forced to enact a sharp reduction in benefit payments in the middle of this decade, or “other Medicare savings would have had to be found.”

Enter the health-care law, which provides about $575 billion in Medicare savings — enough to automatically extend the life of the trust fund through 2029, according to estimates at the time, and avoid a sharp cut in benefits. But in cost estimates by the nonpartisan CBO, those savings also offset a dramatic expansion of Medicaid under the law, as well as new subsidies for uninsured people to purchase coverage.

What Blahous calls “double counting” is actually the “unified budget process,” an accounting method that considers the spending and revenues of the entire federal budget over a 10 year period and the way Congress keeps track of its dollars. It’s the same math that the Congressional Budget Office (CBO) relied on to conclude in 2010 that the law “would produce a net reduction in federal deficits of $143 billion over the 2010–2019 period as result of changes in direct spending and revenues.” Earlier this week, the CBO updated its estimate, reporting that the Affordable Care Act is expected to cost $50 billion less than they anticipated and Medicare actuaries reported that as a result of the savings in the law, the life of Medicare’s Hospital Insurance (HI) Fund is extended to 2024, instead of in 2016.

Here is how the accounting process works: revenue or savings from the law enters the general fund of the federal treasury, where it is counted towards deficit reduction. The money is credited to the Medicare trust fund, which receives a treasury security that will be paid out in interest when necessary. Should the trust fund cash in its bond, that money is transferred from the general treasury to the fund. However, since the same revenue cannot be used to reduce the deficit and extend the life of the trust fund, Treasury would have to find that money somewhere else. But, given the principles of unified accounting, that money is said to reduce the deficit and extend the life of the fund.

As Jonathan Blum, the director of the Center for Medicare Management for CMS, explains, “I think it’s been a historical, and longstanding budget convention that when you have less dollars paid to the Medicare program to pay for benefits, there are dollars that accrue to the overall federal treasury, that can be spent for other purposes. And this is an OMB, CBO budget convention.”

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As the Supreme Court prepares to consider the constitutionality of the Affordable Care Act, opponents of the law continue to lie about its consequences.

Just last week, Republicans misrepresented a Congressional Budget Office (CBO) report which said that the Affordable Care Act was expected to cost $50 billion less than they anticipated a year ago while extending coverage to 30 million Americans. In spite of what the report actually found, many Republicans have claimed that the cost of the bill would double. As FactCheck.org points out, Republicans appear to have reached their conclusion by distorting the math:

So, where did Republicans get their $1.76 trillion cost figure? That’s the gross cost for 11 years ending in 2022. Republicans inappropriately compare that figure to the original estimate of $938 billion for the 10-year period ending in 2019.

The 11-year figure is much higher because it includes three additional years of full implementation of the coverage provisions of the law. The federal subsidies and expansion of Medicaid, which are by far the most costly elements of the coverage provisions, don’t go into effect until 2014. So, that 2010-2019 estimate includes four years of very low coverage costs (relatively speaking), and the 11-year estimate only includes two years of very low costs, plus three extra years of full implementation costs.

It is worth noting that Republican attempts to repeal either the whole bill or parts of it are projected to increase the budget deficit, suggesting that Republicans are more interested in delivering a blow to President Obama than lowering the national debt. At least one conservative justice has also noted the potential for “economic chaos” if the law was struck down and health care costs rose as a result.

More to the point, however, this is not the first time that a CBO report on the health care law has been misrepresented by its opponents to make it seem like they reached a different conclusion. Nor is it the first time that claims about the law have turned out to be inaccurate. Even the suggestion that millions of Americans will lose workplace health insurance ignores the reality: While employer coverage will vacillate — as it has before the ACA was enacted — the vast majority of businesses say they will continue to offer coverage to employees when the law’s insurance exchanges start up. In fact, if Massachusetts’ health reform is any indication, employers are highly unlikely to dump employees into the exchanges.

With most legal observers believing the Court will ultimately uphold the Affordable Care Act, and few compelling legal arguments available for its opponents, it appears the only way they see fit to attack the law is to lie about it.

-Zachary Bernstein

House Republicans, the loudest proponents of deficit reduction, are pursuing a measure that would greatly increase the deficit: repealing the Affordable Care Act’s Independent Payment Advisory Board. The 15-member cost-cutting commission is tasked with making binding recommendations to Congress for lowering health care spending if costs increase beyond a certain point. But House Republicans claim that IPAB will “ration” care to seniors and have advanced legislation to eliminate it.

Today’s score of that bill from the Congressional Budget Office (CBO) finds that repealing the board would increase the national deficit by $3.1 billion” and grow health care expenditures:

CBO estimates that enacting H.R. 452 would not have any budgetary impact in 2012 but would increase direct spending by $3.1 billion over the 2013-2022 period. That estimate is extremely uncertain because it is not clear whether the mechanism for spending reductions under the IPAB authority will be triggered under current law over the next 10 years. However, it is possible that such authority would be triggered in one or more of those years; thus, repealing the IPAB provision of the ACA could result in higher spending for the Medicare program than would occur under current law.

So far, the House Ways and Means and the Energy and Commerce Committees have voted to repeal the board and House GOP leadership hopes to vote on it by late March. In a statement after the Ways and Means Committee approved the bill, Rep. Paul Ryan (R-WI) argued repeal would protect seniors from “waiting lists.”

But many of those in Congress who want to get rid of IPAB now have previously supported an IPAB-on-steroids plan. And the panel would not cut payments for seniors’ Medicare benefits, but would rather encourage providers to adopt best practices and offer care more efficiently.

So despite all the fear-mongering about limiting health care for seniors, repealing IPAB would wildly increase the deficit and health spending — the opposite of what the GOP claims.

The number of Americans who received health insurance from their employer dropped again in 2011, continuing a three-year decline. According to a Gallup survey, 44.6 percent were insured through their employers in 2011, compared to 45.8 percent in 2010 and 49.2 percent in 2008. And at the same time, the number of Americans without insurance has increased, growing from 14.8 percent in 2008 to 17.1 percent last year.

The Affordable Care Act is expected to stabilize the employer health insurance market while opening up options for people who are uninsured through the state insurance exchanges. In 2009, more than 50 million Americans were uninsured, but estimates show that the Affordable Care Act will reduce the number of uninsured by 32 million once it is fully implemented.

Outlays for Medicare, Medicaid and “other mandatory federal programs related to health care accounted for just under 40 percent of mandatory spending in 2011,” the Congressional Budget Office reported today and will continue to grow into the future. For instance, a boost in the number of beneficiaries will increase Medicare spending to more than $1 trillion by 2022, reflecting 4.2 percent of the Gross Domestic Product, (GDP) and raise Medicaid spending to $605 billion:

Interestingly, the growth in Medicare spending per beneficiary over the 2012–2022 period will only average “1 percent a year more than the rate of inflation” — compared to a 5 percent a year growth between 1985 and 2007 — as a result of “the anticipated influx of younger, healthier beneficiaries” and the constraining effects of the SGR formula and the limits on updates to payment rates for other services,” the CBO projects. Per-beneficiary spending will increase thereafter as a result of “rising drug costs” and “more generous benefits enacted in the Affordable Care Act.” Outlays will increase if Congress patches the Sustainable Growth Rate (SGR) and prevents a scheduled 27 percent fee reduction for Medicare doctors in March 2012, as lawmakers have pledged to do. “If payment rates stay as they are now through 2022, outlays for Medicare (net of premiums) would be $9 billion higher in 2012 and about $316 billion (or about 5 percent) higher between 2013 and 2022,” CBO concludes.

Expenditures on Medicaid, on the other hand, will decrease in 2012 “as states become responsible for a higher share of total costs than had been the case in recent years.” The program grow steadily between 2014 an 2016, when more lower-income Americans become eligible for Medicaid under health care reform. By 2022, about “95 million people will be enrolled in Medicaid at some point in the year, CBO estimates.”

A new Congressional Budget Office (CBO) analysis finds that raising the Medicare eligibility age (MEA), a popular conservative entitlement reform proposal that has also received limited support from President Obama and Democrats in Congress, could reduce Medicare spending by about 5 percent over the long-term:

CBO expects that most people affected by the change would obtain health insurance from other sources, primarily employers or other government programs, although some would have no health insurance. Federal spending on those other programs would increase, partially offsetting the Medicare savings. Many of the people who would otherwise have enrolled in Medicare would face higher premiums for health insurance, higher out-of-pocket costs for health care, or both.

CBO estimates that raising the MEA would reduce Medicare outlays, net of premiums and other offsetting receipts, by $148 billion from 2012 through 2021. By 2035, Medicare’s net spending would be about 5 percent below what it otherwise would be—4.7 percent of GDP rather than 5.0 percent under current law. A rise in the MEA would cut by a larger percentage the number of years during which the average person would receive Medicare benefits, but the percentage reduction in outlays would be smaller because the people affected would be the youngest beneficiaries, who tend to be the healthiest and thus to require the least costly health care.

But this is just one small part of the cost picture. CBO isn’t calculating how raising the age would actually increase overall system spending “by shifting costs to most of the 65- and 66-year-olds who would lose Medicare coverage, to employers that provide health coverage for their retirees, to Medicare beneficiaries, to younger people who buy insurance through the new health insurance exchanges, and to states.” As the Center On Budget and Policy Priorities’ (CBPP) Paul N. Van de Water has concluded, that estimated increase in costs could “total $11.4 billion — twice the net savings to the federal government” in 2014 alone.

And then of course there is the human cost of essentially privatizing Medicare for the youngest beneficiaries (those between the ages of 65 to 67). As the CBO’s own brief concedes, “Some people would end up without health insurance. People without health insurance are likely to receive lower quality care and pay more than insured people do.” Much more on that point here.