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U.S. Senate hopeful Ted Cruz, a Republican from Texas, tweeted a claim that’s been racing through Republican circles in response to updated cost projections of the national health reform law.
"Did you know ObamaCare will cost nearly twice as much as initially expected - $1.8 TRILLION?" Cruz tweeted March 19, 2012.
Other politicians have been making similar claims since the Congressional Budget Office released a new report March 13, 2012, about the law’s expected costs. Fox News also ran a story saying the health law will cost twice as much as originally estimated.
A close read of the report indicates that cost projections have increased -- but have not nearly doubled.
The health care law, passed in 2010, helps individuals obtain health coverage by expanding Medicaid and providing subsidies for moderate-income Americans to purchase insurance.
In 2010, the CBO analyzed cost projections, which go up over time as more provisions of the law are implemented. In that report, the gross cost to the government for coverage was projected at $938 billion. That figure -- again, the gross cost -- didn’t take into account revenue offsets, such as new taxes on the wealthy and penalties paid by individuals and employers who don’t opt into insurance. Those payments bring down the law’s net cost.
The CBO’s latest report updates those figures, but it looks at different years. The new gross estimate is $1.762 trillion -- the figure cited in Cruz’s tweet. But it looks at costs over 11 years -- 2012-2022 -- whereas the earlier report’s figure was for 10 years. And it’s important to note that the timespan of 2012 through 2022 covers nine years when the law is fully implemented (and thus its costs are greater).
So, when we compare the years encompassed in both reports (2012 through 2019), here’s how that apples-to-apples comparison shakes out.
In the CBO’s first estimate, the gross figure is $931 billion.
In the new estimate, the figure is $1.01 trillion.
That’s an increase of 8.6 percent -- far short of Cruz's claim that it is "nearly twice as much."
Ezra Klein pointed out in the Washington Post’s Wonkblog that the cost went up "because the recession has made people poorer, and so the health-care law is going to have to spend more to help them get health insurance."
Finally, when comparing net figures from the CBO -- which certainly provide a more true-to-life picture of the law’s cost than gross numbers -- the projection for those eight years is actually less. The CBO estimated it at $784 billion in 2010 and revised that to $768 billion in 2012.
Cruz's spokesman responded to our inquiry by suggesting that the CBO's original cost projection was misleadingly low because it covered years before the law was fully implemented.
"Even the new CBO score includes two years before the law goes into full effect, so the eventual CBO score for the first 10 years of full implementation will be far higher than the new $1.76 trillion cost-of-coverage in the latest CBO score," spokesman James Bernsen wrote.
But that also ignores the revenue that will be coming in from taxes and penalties, which drive the overall cost down.
Cruz’s tweet saying that the cost of health reform has nearly doubled does not reflect an accurate comparison of dollars or years. When the CBO’s early projections are held up to new projections accurately, the gross cost increase is 8.6 percent. Cruz was a long way off. We rate his claim False.
When our story first published, we hadn't heard back from Cruz's campaign. A short time later, we received an email from his spokesman and we updated the story to include his response.
Twitter.com, @tedcruz feed, March 19, 2012
Congressional Budget Office, "Updated Estimates for the Insurance Coverage Provisions of the Affordable Care Act," March 2012 (chart cited in this report is on page 11)
Congressional Budget Office, "Selected CBO Publications Related to Health Care Legislation, 2009–2010," December 2010 (chart cited in this report is on page 32)
Fox News, "New CBO health law estimate shows much higher spending past first 10 years," March 14, 2012
Factcheck.org, "Health Care Costs Didn’t Double," March 16, 2012
Washington Post Wonkblog, "No, the CBO hasn’t doubled its cost estimate for health-care reform," March 20, 2012
Email interview with James Bernsen, spokesman for Ted Cruz, March 21, 2012
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