Health Care Law Gives 'Notable Improvement' To Debt Outlook If Implemented: GAO Report

A new non-partisan report finds that the cumulative effects of President Obama's health care reform package would be beneficial for the government's efforts at debt reduction if the law is implemented fully.

The U.S. Government Accountability Office put out a report on Monday afternoon that provides some welcome news for defenders of the Affordable Care Act and, perhaps, a bit of pause for those eager to overturn or de-fund the legislation. The debt is an increasingly dire crisis, the investigative arm of Congress found. But one thing alleviating the problem, though by no means eliminating it, is the health care reform package passed this past spring.

The federal government faces long-term fiscal pressures that predate the economic downturn and are driven on the spending side largely by rising health care costs and an aging population. GAO's simulations show continually increasing levels of debt that are unsustainable over the long-term. Under the Alternative simulation, debt held by the public as a share of GDP would exceed the historical high reached in the aftermath of World War II by 2020. Both of these simulations incorporate effects of health care legislation enacted in March 2010, which includes a number of provisions to control the growth of federal health care spending. There is a notable improvement in the long-term outlook under the Baseline Extended simulation, which assumes full implementation and effectiveness of cost control provisions.

(Emphasis is ours)

The report goes on to air skepticism from Social Security Trustees, the Congressional Budget Office and the CMS (Centers for Medicare and Medicaid Services) Actuary that those cost control provisions will be put in place or, for that matter, that they will be "sustainable" over time. But that is a problem that reform advocates would argue is worth having. Better to tinker with the cost control mechanisms, after all, then to have to restructure an entire bill because it failed to control costs in the first place.

It's also worth noting that the GAO was fairly judicious with how they calculated its projections. It was assumed, for instance, that Congress would pass some form of a "doc-fix" in which Medicare physician payment rates were adjusted to "grow with inflation." The GAO also took into account the federal spending for the Children's Health Insurance Program (CHIP) and subsidies for the newly created health insurance exchanges.

Even with these costs assumed, the overall grade for health care reform is a positive one, even if the country's fiscal future is deemed dour.

"These long-term simulations show that absent additional policy actions the federal government faces unsustainable growth in debt," the GAO reports. "Health care legislation enacted earlier this year has the potential to slow the growth of federal health care spending. However, even under the more optimistic Baseline Extended scenario, which assumes the full implementation and effectiveness of cost control provisions, debt grows continuously over the long term indicating that more needs to be done."