The Long-term Costs of Obamacare: $17 Trillion in Unfunded Obligations
For over two decades, Truth In Government has been sounding the alarm about the U.S. Government’s unfunded obligations. TIG has continued to educate the public about the $70+ Trillion in entitlement liabilities that threaten the financial sustainability of the United States. Now, more than ever, there is a need for accountability in federal budgeting, financial reporting, and performance measures.
It is my opinion that the current debate in Washington has focused more on back-room shenanigans and political posturing than the long-term fiscal outlook of our nation. The purpose of this memo is to report on the long-term financial costs of the Affordable Care Act (also known as Obamacare), so that you can come to your own independent conclusion on the issue.
Social Security & Medicare:
Based on the 2012 Financial Report of the U.S. Government (prepared by the Treasury Department), unfunded obligations for a 75-year period for Social Security and Medicare programs are estimated at over $38 Trillion (see U.S. Government Financial Position and Condition Balance Sheet below).
In practice and in appropriations, Medicaid (like Medicare and Social Security) is considered an entitlement program in which expenditures are funded by more permanent Congressional appropriations and so are considered mandatory spending.
Based on the 2012 Actuarial Report on the Financial Outlook for Medicaid, Medicaid is expected to register about 18 million new Medicaid enrollees by 2021 as a result of new eligibility requirements in the Affordable Care Act.
While the annual growth rate of Medicaid costs per beneficiary will decrease from 2014-2021, the collective costs of the Medicaid program will increase drastically. In fact, the Actuary for the Centers for Medicare and Medicaid Services estimates that the Affordable Care Act is expected to increase Medicaid expenditures in total by $514 billion for 2012-2021.
The same report details that Medicaid expenditures are projected to reach $830.9 billion in 2021 under the scenario in which everyone who is eligible to enroll in the Medicaid program does so.
The Bottom Line on Obamacare:
Because the Affordable Care Act utilizes the Medicaid program for its implementation, and because politicians have given the impression to constituents that funding for Medicaid will remain permanent, there is no expectation that the federal government will not continue to pay out on its promises over the next 75 years for those living today. (This is true even in the case of a government shutdown as Medicaid is considered mandatory spending).
The estimated federal health expenditures over a 75-year period for Medicaid would increase by $17 Trillion dollars due to the expansion of Medicaid enrollees as a result of the Affordable Care Act.
“The $17 trillion figure is an estimate produced by the Senate Budget Committee’s minority staff and is based on the long-term model used by the Office of the Actuary at the Centers of Medicare and Medicaid Service to estimate federal health expenditures over a 75-year period. The assumptions and methodology used to build the model is from CMS’s Office of the Actuary. Data on the cost of the Medicaid expansion and the premium subsidies in the 10-year window is from the Administration and the Congressional Budget Office.” – Senate Budget Committee, Minority Staff, Office of the Actuary for the Centers for Medicare and Medicaid Services calculations.
The need for accountability in federal spending does not only center on a single issue or law. Truth In Government remains unwavering in its belief that only real accounting, budgeting, and financial management reforms can ensure fiscal responsibility in Washington and sustainable economic growth for America.
Please remember that our nation's unfunded obligations are the result of decades of politicians trying to curry favor with today’s voters at the expense of tomorrow’s taxpayers--a modern day example of TAXATION WITHOUT REPRESENTATION.