GAO: Health Law Will Increase Deficit If Cost-Cutting Steps Stop

The Affordable Care Act's long-term deficit impact depends on the law's cost-cutting measures and whether they survive over the next several decades, government auditors said Tuesday.

In a new report, the nonpartisan Government Accountability Office (GAO) found that President Obama's signature law could increase or decrease the deficit over the next 75 years depending on whether its cost-saving provisions survive.

In addition to creating certain healthcare benefits and requiring most people to carry insurance, the Affordable Care Act includes measures aimed at curbing the projected growth in U.S. healthcare costs.

Among these measures are Medicare productivity adjustments and the Independent Payment Advisory Board (IPAB), the panel Republicans believe unfairly wrests legislative authority from Congress in its charge to cut Medicare payments when the program's spending grows too quickly.

The GAO said Tuesday that the success of these provisions will determine whether the Affordable Care Act affects the deficit for good or ill.

Assuming the law is enforced as-is, the U.S. deficit will decline 1.5 percent as a share of the economy over the next 75 years, according to the GAO. Auditors attributed 1.2 percent of this improvement to the Affordable Care Act.

Under a different set of assumptions, the law has the opposite effect over time, the GAO said — the deficit will increase by 0.7 percent of gross domestic product (GDP) if the law's cost-containment measures are phased out.

The report attributed this potential increase in part to the law's most expensive features — the Medicaid expansion and the provision of insurance subsidies.

The report was requested by Sen. Jeff Sessions (Ala.), the top Republican on the Senate Budget Committee. On Tuesday, he and his office jumped on the figures to say that the healthcare law will increase the deficit by $6.2 trillion over 75 years.

To arrive at this figure, Sessions's office assumed the second scenario, in which the law's cost-containment measures end, and added up 75 year's worth of deficits using GDP projections from the Centers for Medicare and Medicaid Services.

Republicans have argued since the law's passage that it will prove a major liability for the federal budget.

"The big tax increases in the bill come nowhere close to covering the bill's spending," Sessions said Tuesday during a Budget Committee hearing.

"The big-government crowd in Washington manipulated the numbers to get the financial score they wanted, to get their bill passed and to increase their power and influence," Sessions said.

In its 59-page report, the GAO said there remain "significant uncertainties" surrounding the law's effect on U.S healthcare spending, which in turn impacts the national deficit.

The "development and deployment of medical technology, future policy decisions, and cost and availability of insurance" all contribute to the state of total healthcare costs, the GAO said.

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Modest Steps Could Add Up To Big Success For Clean Energy In 2013

by Noah Ginsberg, via the American Council on Renewable Energy

Looking back at 2012, one thing is certain in the sea of the year’s uncertainty; renewable energy experienced significant growth.

The U.S. solar industry grew at a rate of 13.2%.  A global oversupply of solar panels lowered prices for American consumers, resulting in higher demand and greater profits for solar installation companies. SolarCity’s IPO proved to be successful despite claims that its stock would immediately plummet. And even with excessive political attacks by opponents of renewable energy – over $250 million spent in the 2012 election – the industry has gained strong public support across the country.  Industries such as wind, biofuels, geothermal, hydropower, electric transportation, and solar have achieved success in 2012 but the next step in supporting growth is creating a more stable policy landscape.

Creating a stable policy landscape should start with an extension of the Production Tax Credit (PTC), which expires at the end of 2012. The PTC has been very effective in bringing wind energy and other renewable energy sources to scale, unlocking billions of dollars in private investment for wind energy. It encouraged the development of almost 4 GW of wind energy in the first ten months of 2012 alone. The PTC has also contributed to a 38% drop in project development costs for wind farms in the past four years. In order to continue the strong trajectory the industry is on, an extension of the PTC for 2013 and beyond is needed, albeit with an appropriate timeline for a phaseout.

Adopting legislation to qualify renewables as Master Limited Partnerships (MLPs) would also attract additional capital into renewable energy development. According to Secretary Chu of the Department of Energy, if MLP legislation is signed into law and renewable energy is considered a “qualified” energy source under MLP legislation, there will be a significant increase in investments in renewable energy development. Furthermore, it will create a stable financial landscape for both small and large-scale investors who wish to enter the market. Senator Chris Coons of Delaware has proposed MLP legislation for renewable energy and his legislation may see bipartisan support in the early months of 2013.

Every year, critics of renewable energy get louder even as the prices of electricity generated from renewable sources decrease. Although 2012 was an election year and political attacks were targeted at renewable energy, the industry braved the storm. The business case for renewable energy has gotten stronger in 2012 and will continue to do so – even if there are some bumps on the horizon.

Now more than ever, the potential, production, and capacity for renewable energy are enormous, but with sound energy policy the potential is exponentially greater. Political gridlock is looming in 2013. The year may not start the way anybody wants it to, but it still has the potential to end on a very high note for American renewable energy.

Noah Ginsberg is a Communications Associate for ACORE. This piece was originally published at ACORE and was reprinted with permission.

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