The Economy

ACA Repeal Would Increase Deficit, Boost Growth

CBO report forecasts a $353 billion increase in budget deficit over 10 years and an average 0.7% rise in growth.
Matthew HellerJune 22, 2015

A new Congressional Budget Office report on the estimated effects of repealing the Affordable Care Act provides ammunition for both supporters and critics of the landmark law.

On the one hand, the CBO forecasts, repeal would increase federal budget deficits by $353 billion over 10 years — or $137 billion after taking macroeconomic growth into account, including the slightly larger workforce participation that would result from repeal.

Budget deficits would rise by growing amounts after 2025, according to the report. That’s because “the net savings attributable to a repeal of the law’s insurance coverage provisions would grow more slowly than would the estimated costs of repealing the ACA’s other provisions — in particular, those provisions that reduce updates to Medicare’s payments.”

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“Any way you slice it, repealing the Affordable Care Act will add hundreds of billions of dollars to the deficit,” House minority leader Nancy Pelosi told Politico. “Republicans should look at the numbers and finally end their fixation with repealing this historic law.”

But Republicans seized on the report’s finding that a repeal would boost economic growth by an average 0.7% over the next decade.

“CBO has determined what many in Congress have known all along,” Senate Budget Committee chairman Mike Enzi said in a statement. “This law acts as an anchor on our economy by dragging down employment and reducing labor force participation.”

The CBO cautioned that the budgetary and economic effects of an ACA repeal “could differ substantially in either direction from the central estimates presented in this report. The uncertainty is sufficiently great that repealing the ACA could reduce deficits over the 2016–2025 period — or could increase deficits by a substantially larger margin [than the report estimates].”

The report also estimates that the number of non-elderly people who are uninsured would increase by about 19 million in 2016; by 22 million or 23 million in 2017, 2018, and 2019; and by about 24 million in all subsequent years through 2025, compared with the number who are projected to be uninsured under the ACA.

A Supreme Court ruling against the federal government in the current case challenging the ACA would not repeal the law (a decision is expected this week). But if Republicans win the presidency in 2016 and hang onto both houses of Congress, repeal efforts would be likely.