CBO: Obamacare Unlikely to Reduce Spending on Health Care

Kathryn Nix / July 01, 2010

Yesterday, the Congressional Budget Office released its annual long-term Budget Outlook, which provides a look at mandatory federal spending on health care after passage of the Patient Protection and Affordable Care Act.

One may have expected to see drastic changes after the passage of Obamacare.  After all, this legislation was supposed to reduce costs and overall health spending.  However, the CBO’s report highlights the unlikelihood that cost-containment strategies included in the new law will ever come to fruition.

In its projections, CBO looks at two scenarios.  The extended-baseline scenario assumes that current law will occur as written.  The second, more likely occurrence, is the alternative fiscal scenario, which makes realistic assumptions about the future behavior of lawmakers.  For example, the extended-baseline scenario assumes that a 21 percent reduction to physician payments under Medicare will actually occur.  But since its inception in 1997, these reductions have been suspended every year, known as the “doc fix”.  Just days ago, Congress suspended the payment reductions for another six months, and you can be sure they will suspend it again when it expires in the future.  The alternative fiscal scenario accounts for this. (more…)