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You know you’re inside the Beltway when a report from the Congressional Budget Office triggers a fusillade of tweets and punditry from partisans spanning the political spectrum. The CBO’s latest prediction on the budget and the economy devotes an entire appendix to the human and fiscal impacts of the Affordable Care Act, aka Obamacare.
Fox News host and business analyst Stuart Varney helped viewers make sense of some of the hefty numbers from the CBO. Talking with America’s Newsroom host Bill Hemmer, Varney explained that even though the deficit is expected to reach its lowest point of the Obama presidency, it will soon rise again.
"The major reason for this is Obamacare," Varney said. "New figures suggest that Obamacare will be much more expensive than we thought. It will cost $50,000 per enrollee in Obamacare over the next 10 years."
Varney’s claim about $50,000 per enrollee caught our eye because we’ve seen it all over the Internet and we wanted to see how accurate it might turn out to be.
We reached out to Varney and did not hear back. But the original source, at least the earliest we could find, is an article in the British Daily Mail. Here’s how that article begins:
It will cost the federal government – taxpayers, that is – $50,000 for every person who gets health insurance under the Obamacare law, the Congressional Budget Office revealed on Monday.
The number comes from figures buried in a 15-page section of the nonpartisan organization's new ten-year budget outlook.
The best-case scenario described by the CBO would result in 'between 24 million and 27 million' fewer Americans being uninsured in 2025, compared to the year before the Affordable Care Act took effect.
Pulling that off will cost Uncle Sam about $1.35 trillion – or $50,000 per head.
The basic math is correct. Divide $1.35 trillion by 27 million people and you get $50,000.
But health policy analyst Joe Antos at the American Enterprise Institute, a free-market oriented think-tank in Washington, told PunditFact that the number is meaningless.
"You can’t divide a 10-year spending number by the average number of people who are newly insured," Antos said. "That’s not the way it works."
We heard the same comment from Christine Eibner, a RAND health care economist."It is analytically problematic to compare a single-year estimate of the change in the uninsured population to a 10-year projection of the costs," Eibner said.
Economist Jeffrey Clemens at the University of California-San Diego called the original calculations "a bit of a mess."
Antos said the CBO would never do such an analysis itself because the "two numbers don’t relate to each other." One is a running total over a decade and the other is a snapshot of the number of people who gained insurance in a single year, over and above what the CBO would expect without the Affordable Care Act.
"Just because you can divide one number by another, it doesn't mean anything," Antos said. "Good arithmetic doesn't count when it’s based on bad logic. Obamacare is expensive and inefficient, but this doesn’t prove that."
Donald Marron is director of economic policy initiatives at the Urban Institute and former acting head of the CBO. Marron pointed out another issue with the calculation in the Daily Mail. The flows of people in and out of insurance coverage are complicated. While millions of people might sign up through the Affordable Care Act exchanges, millions are expected to fall away from getting coverage through their employers or on the individual market. The 27 million used by the newspaper article was a net figure.
"The number of people helped will be something like 40 million," Marron said. "That includes the exchanges and Medicaid and CHIP (children’s health insurance). These are the people newly helped by the coverage."
Marron also noted that you would want a way to factor in the years that these people are helped, but regardless, spreading the costs across 40 million people would drive down the cost for each individual covered.
Varney said that it will cost taxpayers $50,000 per enrollee in Obamacare over the next 10 years. This seems to come directly from an article in the Daily Mail.
None of the health care experts we reached, regardless of their economic philosophies or thoughts about the health care law, found any merit in the math that produced this figure. It’s most glaring defect is that it compares a 10-year cumulative total to a single-year snapshot of the number of people who gained insurance.
Any analysis that accounted for the years of coverage people gained would yield a dollar figure considerably less than the $50,000 cited by Varney.
We rate the claim False.
Fox News, America’s Newsroom, Jan. 27, 2015
Congressional Budget Office, Updated Estimates of the Insurance Coverage Provisions of the Affordable Care Act, Jan. 26, 2015
Interview, Donald Marron, director of economic policy initiatives, Urban Institute, Jan. 27, 2015
Interview, Joe Antos, scholar in health care and retirement policy, American Enterprise Institute, Jan. 27, 2015
Email interview, Christine Eibner, senior economist, RAND Corp., Jan. 27, 2015
Email interview, Jeffrey Clemens, economist, University of California - San Diego, Jan. 27, 2015
Email interview, Louise Sheiner, senior fellow in economic studies, Brookings Institution, Jan. 27, 2015
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