- The Washington Times - Tuesday, April 10, 2012

Stirring up an old fight over whether President Obama’s health care overhaul will ease or exacerbate the government’s deficit, a Republican expert on benefit programs said Tuesday that the law will add billions more to the debt than projected.

While the Congressional Budget Office has said the Affordable Care Act will slightly trim the deficit, Medicare and Social Security trustee Chuck Blahous released a report charging the law will instead grow it anywhere from $340 billion to $540 billion in the next decade. He accused the CBO of counting savings from the law twice.

But the CBO didn’t use any new techniques to evaluate Mr. Obama’s law. The nonpartisan agency’s evaluation relies on a standard, decades-old accounting method to reach its projections, according to experts.

The White House was quick to point out that the same accounting methodology was used on the 1997 Balanced Budget Act and the 2005 Deficit Reduction Act — both passed by Republican majorities.

“In another attempt to re-fight the battles of the past, one former Bush administration official is wrongly claiming that some of the savings in the Affordable Care Act are ‘double-counted’ and that the law actually increases the deficit,” health policy assistant Jeanne Lambrew posted on the White House blog. “This claim is false.”

Mr. Blahous served from 2001 to 2007 as a special assistant to the president for economic policy, then was appointed as a Social Security trustee by Mr. Obama.

The dispute is over how the CBO calculates the new revenue and savings generated by the 2010 overhaul. While much of that money will flow into the Medicare hospitalization trust fund, it also can be used to pay for other provisions in the law, such as new insurance subsidies for Americans.

Even though that’s allowed under budgeting rules set by Congress, Republicans have accused the agency of “double-counting.”

Eager to criticize President Obama’s signature domestic reform, GOP lawmakers who uniformly opposed the law tried to churn up the issue as they were debating the legislation two years ago.

Mr. Blahous, a senior fellow at the libertarian-leaning Mercatus Center, revived the debate this week with his report, concluding that the government must cut new insurance benefits for lower-income Americans by roughly two-thirds in order to side step deeper deficits.

“If the [Affordable Care Act] is not to result in severe damage to future federal finances, various of its cost-increasing provisions must be scaled back considerably before they take full effect,” he wrote.

Medicare actuaries have acknowledged that the accounting method can be misleading, with Chief Actuary Richard S. Foster saying shortly after the law was passed that the savings can’t be used for dual purposes.

“In practice, the improved … financing cannot be simultaneously used to finance other federal outlays (such as the coverage expansions) and to extend the trust fund, despite the appearance of this result from the respective accounting conventions,” Mr. Foster wrote.

But experts say that by criticizing the CBO’s health care law projections, Mr. Blahouse is calling the agency’s entire accounting practices into question.

“The CBO looks at not just the trust fund in isolation, but looks at the budget as a whole,” said Igor Volsky, a health care expert at the Center for American Progress. “Again, they’ve been doing this forever. Those are the rules of the road.”

And Paul N. Van de Water, a fellow at the Center on Budget and Policy Priorities who worked at the CBO for 18 years, said he never heard anyone question the agency’s accounting practices, which allow it to include assumptions of what will likely happen in order to reach a more accurate projection.

He said that under the method Mr. Blahous is suggesting, the agency would have to assume Congress would allow President George W. Bush’s tax cuts to expire, thereby dramatically reducing the long-term deficit projections Republicans like to rail on.

“You could carry this to an extreme because if you literally followed current law down to the letter in each and every respect, you’d probably be running large surpluses in total,” Mr. Van de Water said.

Former CBO director Douglas Holtz-Eakin suggested doing away with the Medicare Part A trust fund entirely since the rest of Medicare doesn’t operate within a trust fund anyway, saying the way it’s accounted for is “completely misleading.”

“It was a bad idea then and it’s still a bad idea, and Chuck’s just pointing it out,” Mr. Holtz-Eakin said.

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