The incredible shrinking Obamacare issue and why it has no place in deficit reduction negotiations

 The Obamacare (Affordable Care Act, ACA)  controversy has been rolled into  reforming entitlements as part of the dealing with the White House on raising the debt ceiling.and deficit reduction.  However, the GOP’s rationale for  defunding, repealing, delaying or  sabotaging the ACA because it would increase  the deficit is bogus.   In fact,  the GOP proposals would  add to the deficit .

 The GOP House of Representatives has reduced  their  conditions  to ending the shutdown or raising the debt ceiling  from defunding the ACA  to delaying it a year   to  just removing  the tax on medical devices, or  removing  the penalty on individuals who fail to sign up for insurance by March 31. Rep. Paul Ryan did not even mention the ACA in an op-ed in the New York Times as he tried to move the GOP goal  to reforming all entitlements as a  debt ceiling and deficit reducing  bargaining chip.

Tea Party die hards still want to include the ACA in the entitlement discussion. .  To tie the ACA to deficit negotiations  is nonsensical.  The Congressional Budget Office  said the  ACA would decrease the deficit by $109 billion over ten years and that the ACA added 12 years to the life of Medicare.  The ACA has a “pay for” built in through a variety of mechanisms:  reducing the overpayment to insurers for coverage and holding them to no more than 20% of premiums for overhead; reducing payments to hospitals because they no longer have to absorb the costs of treating  uninsured patients who could not pay their bills.  The previously  uninsured  now have affordable access to insurance.  Competition within the marketplace exchanges are  resulting in  premiums which are even 16% lower than original predictions.  Unnecessary but expensive subsidies to Medicare Advantage private insurer administrators have ended. Some taxes and penalties  will also  produce  revenue.

 Some fear   that increasing the debt limit is a go ahead to go into debt more in the future. Lifting the  debt limit does not approve  more expenditures than Congress has already approved.  There are those that contend that if the debt limit increase is not approved, nothing will happen..  There is no one in the business community or Wall Street  or  the prime funders of the Tea Party movement, the Koch Brothers,  who  agree with that.

What  the GOP  advocates could make the deficit worse.  For example, removing the tax on medical devices could  add to   the deficit by  at least  $29 billion in lost revenue over 10 years.  Another “pay for” should be included in any deal to maintain the ACA’s contribution to deficit reduction.. Some  deal is likely since the President says it  is not a “core” part of the ACA.

Another GOP proposal, to  delay the penalties associated with the  mandate for young people to sign up is a “core” attack on the ACA. Not bringing the younger and healthy into the insurance pool would sabotage the affordability of  covering pre-existing conditions because that is what makes that part of the ACA affordable.  The  GOP argues   the President let large businesses off the hook for a year from being fined for not having health insurance for their employees. The difference is the impact on the cost of the ACA. Only a very small percent of large businesses do not already provide employee insurance.

  Using  computer glitches in the federal web site  as a reason to delay is  a weak argument since computer software  can be  fixed and administrators  have until March 31, 2014 . Fourteen states like Colorado that opted to run their own systems have better results than the  states who relied on the federal system. . Sign up by computer Is not the only method to enroll.. Marketplace exchanges  provide telephone and   in person enrollment as alternatives to on line sign ups.