Putting the Cost of Health Care Reform in Perspective

There are, believe it or not, plenty of interesting tidbits from CBO’s latest Budget and Economic Outlook. Below, for example, is CBO’s projection of the budgetary costs of different federal medical entitlements. Notice the budgetary impact of the subsidies and exchanges authorized by health care reform (which I’ve labeled “PPACA” in the graph):

In 2021, CBO projects that gross PPACA-authorized spending will come to $94 billion, or about 0.4% of GDP. Federal medical spending will be about 7% higher in 2021 than it would have been absent PPACA, assuming no interaction effects between the different programs. And of course, that’s the gross amount that ignores the spending cuts and revenue increases that PPACA also authorized to pay for itself.

Now, in no fiscal universe is $94 billion chump change. And even through 2021 there’s a great deal of uncertainty surrounding PPACA, to say nothing of the horizon beyond 2021. Nevertheless, Paul Ryan gave an entire speech Tuesday night insinuating (and often more than insinuating) that PPACA is a harbinger of fiscal ruin for the Republic. CBO’s actual numbers, by contrast, are a sobering reminder that the gross costs of PPACA pale in comparison to the growth in net Medicare costs that begin in 2013. Alas, Medicare makes a far less convenient bogeyman for your typical politician.