Repealing President Barack Obama’s signature healthcare reform law would increase the U.S. budget deficit by $353 billion over 10 years, congressional forecasters said on Friday, more than triple the red ink compared to an estimate three years ago.
But the Congressional Budget Office and the Joint Committee on Taxation said the deficit increase would only be $137 billion if economic feedback effects were considered, a sign of a new Republican mandate for increased use of “dynamic scoring” that includes the economic impact of legislation.
The new estimate comes as Republicans mull options for replacing the Affordable Care Act if the Supreme Court rules against the law’s mechanism by the end of June.
The CBO and JCT said the main positive economic effect of an Obamacare repeal would be an increase in labor supply as Americans lose healthcare subsidies, boosting U.S. tax revenues. The agencies previously had estimated that more people nearing retirement age would limit their work and income to obtain federal insurance subsidies.
Based on the “static” budget analysis used most often by the CBO and JCT, the $353 billion deficit increase for 2016-2025 period increase compares to a $109 billion increase estimated for the years 2013-2022.
The higher deficit estimate stems partly from the shifting of the budget window to a time when the law is more fully implemented. Repeal would increase deficits by $275 billion over the 2023-2025 period.
The CBO and JCT also have lowered healthcare cost estimates since 2012, so a repeal of Obamacare’s health coverage provisions would produce less direct savings than estimated previously.
Overall, based on static scoring, a repeal would reduce federal outlays by $821 billion over 10 years but this would be offset by an estimated reduction in revenues of $1.17 trillion.