Tags: CBO | Obamacare | Healthcare | Spending

CBO Confirms Obamacare Driving Half of Increased Healthcare Spending

Friday, 25 Jul 2014 07:14 AM

By Michael Carr

The Congressional Budget Office (CBO) offers unbiased estimates of government spending programs. They do this by following rules which are well-known in Washington so the system is easily gamed. That’s why President Barack Obama was able to say Obamacare wouldn’t add a dime to the deficit when it was passed.

Now, the CBO says it can no longer estimate the impact of Obamacare on the deficit but it can estimate how much government will spend on healthcare. By 2023, the CBO estimates that the federal government will spend 5.9 percent of GDP on healthcare. That is up significantly from the 4.5 percent government spent on healthcare in 2012.

The CBO attributes the higher spending to three factors. About one-fifth of the increase will be due to an ageing population and 26 percent of the increase will be caused by inflation. The biggest driver of increased government spending (53 percent) is the expansion of federal subsidies under Obamacare.

The courts are now deciding whether many of these subsidies are legal or not but their opinions cannot change the fact the government doesn’t have the money to pay for the subsidies. Increases in spending for subsidies means the government will either have to spend less on core government functions like defense or transportation infrastructure or the government needs to raise taxes.

Many believe government subsidies are free but they carry a cost for those who pay taxes, an increasingly smaller group of people in our society.

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