The future of Obamacare: subject to substantial uncertainty

That was the Congressional Budget Office's mantra as it cranked out cost estimates for the Patient Protection and Affordable Care Act (aka, Obamacare). Peter Suderman, over at the Reason blog, notes that CBO's "substantial uncertainty" has already translated into irretrievably broken programs (the CLASS Act), bankrupt programs (early retirement insurance), and far higher per person costs (high risk pools).

Lessons learned?

Mostly what we learn from this story is that it's unwise to put too much trust in the cost and enrollment projections made when the health care overhaul was passed. The law's early retiree reinsurance program blew through its money far faster than expected. The long-term care program was passed on the promise that it could be made fiscally sustainable; the administration pulled the plug when it turned out that wasn't true. The high-risk plans, meanwhile, are turning out to cost far more per-person than anyone guessed--but enrollment is far lower. I'm not suggesting we should completely ignore projections for the Medicaid and exchange provisions that make up the bulk of ObamaCare's insurance expansion. But this is what the Congressional Budget Office was warning about when it repeatedly noted that its ObamaCare cost projections were "subject to substantial uncertainty." And we should expect more deviations from the projections as implementation continues.

Now, to be fair, Democrats could agrue that "uncertainty" could break their way through the ACA's cost containment and payment reform demonstration projects in Medicare. However, the track record of Medicare demonstration projects and across the board payment cuts to providers (think SGR) is pretty bad as well.

And, to add to the fiscal and policy undertainty, we've created an entirely new entitlement program for the uninsured along with adding 16 million more people to Medicaid, a deeply flawed "safety net" for the poor.

In other words, Suderman is right that the downside risks look a lot sharper than any potential upside cost savings - now and for the forseeable future.

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Rhetoric and Reality—The Obamacare Evaluation Project: Cost
by Paul Howard, Yevgeniy Feyman, March 2013

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