Just remember this when you hear some Freedom-Hater crow about FHer-care enrollment numbers

I've said here before that I wish I'd taken economics courses in college.  At the time, I was a stringy-haired, barefoot beatnik English major and thought I could learn all I needed to about econ by osmosis. But the older I get, the more the subject has moved front and center among my subjects of interests.

And I've also said that, given my formal academic background, tempered and improved upon by my reading some actual works by great economists, I've come up with my own first law of economics: The money has to come from somewhere.

It is the point that Charles Blahous of George Mason University's Mercatus Center is driving home in his piece about the costs of FHer-care:

Let’s walk through the salient features of this unfolding fiscal disaster:

An Expansion of Spending Commitments Comparable to Enacting Social Security, Medicare or Medicaid: Our biggest fiscal problems today stem from Medicare, Medicaid and Social Security costs rising well beyond original projections. The ACA was enacted even though these longstanding financing challenges have still not been met, and represents an additional expansion of federal commitments comparable to these other programs’ creations. CBO now estimates that the gross costs of the ACA’s coverage expansion will be $92 billion in FY2015, or about 0.5% of our total GDP of roughly $18 trillion. This far exceeds, even relative to today’s larger economy, the initial costs associated with the entirety of Social Security and Medicaid, and is comparable to the startup costs for all original parts of Medicare combined. Consider this: just five years after enactment the ACA will absorb more of our total economic output than Social Security did fully sixteen years after it was enacted.

Of course, after these initial rollouts, Social Security, Medicare and Medicaid costs grew far faster than originally envisioned, sometimes due to subsequent legislation, sometimes due to unanticipated healthcare cost growth. It wouldn’t be surprising for either factor to affect the ACA, which would be even more problematic for reasons given below.
A Worse Fiscal Environment: The ACA was enacted when legislators knew, or should have known, that they inhabited a fiscal environment in which such extravagance was unaffordable. Deficits (and debt) are far higher today than when the other major entitlement programs were created; millions of baby boomer retirements are swelling expenditures arising from previously-enacted Social Security and Medicare law. Someday historians will puzzle over the thinking that induced legislators to embark on a vast new spending program at the very moment it could least be afforded.

Unraveling Finances: Where will the money come from to finance the ACA’s health exchange subsidies and Medicaid expansion? No one knows. We do know that the ACA’s financing mechanisms are already falling apart. The ACA’s much-reported website glitches and enrollment shortfalls had actually suggested an upside; if enrollment continued to fall short of previous projections, it was possible that some of the fiscal damage could be contained. But if enrollment has picked up as the law’s financing mechanisms disintegrate, the fiscal damage will be worse than anticipated. Consider the following:
CLASS: The ACA’s “CLASS” long-term care provisions were originally projected to generate $37 billion in net premiums through 2015 ($86 billion over ten years). CLASS was later suspended due to its long-term financial unworkability, meaning these revenues have not materialized and will not.
Employer/individual mandate penalties: These were supposed to have brought in $12 billion through 2015, $101 billion over the first ten years. Because the Obama Administration has repeatedly delayed their enforcement, to date they haven’t brought in much of anything. Some ACA advocates are even beginning to downplay the significance of possibly ditching these mandates altogether, though they were central to the law’s financing scheme.
Medicare Advantage: The ACA was supposed to be financed in part by cuts to Medicare Advantage (MA) totaling $31 billion through FY2015, $128 billion over the first ten years. The White House recently announced that planned MA cuts will not go into effect after all

Other controversial provisions: The ACA’s most controversial savings provisions – among them its ambitious Medicare provider payment reductions, the tax on so-called “Cadillac” health plans, and cost-saving decisions of the Independent Payment Advisory Board– have yet to be tested. Given that less-controversial provisions have failed to meet their savings targets, there is little basis for confidence that these more controversial ones will do so.  

 

Some may consider it gauche to mention these unpleasantries, but they loom nonetheless.