×

Here's how GOP repeal of Obamacare would swell the federal deficit

Repealing Obamacare will cost the federal government as much as $350 billion, according to a new estimate.

Congressional Republicans are eagerly anticipating their long-awaited chance to repeal the 6-year-old Affordable Care Act, one of the signature achievements of the Obama administration.

That enthusiasm may be dampened when they learn how much the repeal will cost.

The $350 billion cost estimate in an analysis released Wednesday by the nonpartisan Committee for a Responsible Budget would be spread over 10 years unless key provisions of the law are maintained or replaced.

"Repealing the entire ACA would leave no funds available for 'replace' legislation, and in fact would require further deficit reduction to avoid adding to the debt," the report said.

Most of the law's opponents have focused on the added cost of subsidizing health insurance. But the law also includes dozens of provisions that cut health care and raise taxes that more than offset the money spent.

Despite the GOP's steadfast opposition to the law, that net cost of repealing it could give pause to the party's fiscal hawks on Capitol Hill.

The new analysis looks only at the net cost to the federal government and doesn't take into account the far bigger economic impact on insurers, hospitals, doctors, drug companies and other parts of the sprawling American health system. Nor does its estimate include the financial impact on the roughly 23 million Americans who, the group estimates, would lose coverage if the ACA is fully repealed and not replaced.

After more than 60 failed votes to gut the ACA under President Barack Obama, Republicans now about to be in control of the White House and Congress are poised to eliminate the law that extended health insurance to millions of American families. President-elect Donald Trump and congressional Republicans have vowed to move quickly to repeal the law before articulating the complicated details of a potential replacement.

Vice President-elect Mike Pence went to Capitol Hill on Wednesday to plot strategy with fellow Republicans.

A senior adviser to Trump said Tuesday that after Obamacare is repealed and replaced with different health-care law, no one who has health insurance would lose their coverage.

"That is correct. We don't want anyone who currently has insurance to not have insurance," the adviser, Kellyanne Conway, said on MSNBC's "Morning Joe."

Until details are worked out, though, it's impossible to estimate the financial impact of any replacement plan on the government, the health system and those currently covered by Obamacare.

In its analysis of the cost of repeal, the Committee for a Responsible Budget said the $350 billion price tag could be reduced by indirect economic benefits that would cut the long-term impact to $150 billion over 10 years.

Like the health care system itself, the ACA has lots of moving parts that create costs and savings to the government and generate revenues to help pay for the plan. The committee's analysis, which used Congressional Budget Office figures, breaks them down into three main categories.


The biggest savings of repealing the ACA would come from eliminating the cost of subsidizing individual health insurance and the law's expansion of government-funded, state-run Medicaid insurance. Those costs have been offset somewhat by other provisions, including penalties paid by individuals and employers who don't sign up for insurance. Eliminating all of those provisions would produce net savings of about $1.5 trillion over 10 years, according the analysis.

But the ACA includes dozens of other provisions that were created to cut other costs or raise revenues to pay for providing coverage; a full repeal would also eliminate those savings and revenues.

The cost savings created by the law include an estimated $1.1 trillion over 10 years, according to the committee. Those include cuts to the so-called Medicare Advantage program, controls on the growth of Medicare spending and other savings in Medicare and Medicaid costs.

The law also raised taxes to help pay for itself. Eliminating them would cost the government $800 billion over 10 years, the committee said. Those include taxes paid by hospitals, providers of so-called "Cadillac" high-cost insurance plans and fees paid by insurers, providers and medical device makers, among others.

Those taxes have been unpopular from the start, and lobbyists are already lining up to push for their repeal.

The U.S. Chamber of Commerce and the insurance industry's trade association, American Health Insurance Plans, for example, are pushing to eliminate taxes on medical devices and "Cadillac" health plans.

But repealing all of the ACA's tax provisions, without replacing the coverage provided by the law, will leave Republicans with a politically difficult problem, according to Joe Antos, a health policy expert at the conservative-leaning American Enterprise Institute.

Dropping taxes on high-income earners making more than $200,000 per year, for example, while taking away lower-income people's health insurance could produce a backlash among voters.

"They can't afford to drop that unless they can afford to come up with that money," Antos told NBC News. "Whatever they do to replace they're going to need some money."