Will Medicare Premium Increases Be an Issue in November?

Buried in the Medicare trustees report released Wednesday are a few lines that could cause political controversy. “In 2017 there may be a substantial increase in the Part B premium rate for some beneficiaries,” the actuaries write—which means seniors will find out about increases shortly before Election Day.

Higher-than-expected Medicare spending in 2014 and 2015 set the stage for a large premium adjustment in 2016. But, notably, the absence of inflation thanks to the drop in energy prices last year meant that seniors receiving Social Security benefits did not receive an annual cost-of-living adjustment.

The Medicare statute has a “hold harmless” provision that prevents Part B premiums from rising by more than the amount of a Social Security cost-of-living adjustment. For most beneficiaries, the provision meant that in 2016, they received no such adjustment—but also did not pay a higher Part B premium. However, nearly one-third of beneficiaries—new Medicare enrollees, “dual eligibles” enrolled in both Medicare and Medicaid (in places where state Medicaid programs pay the Medicare Part B premium), and wealthy seniors subject to Medicare means-testing—do not qualify for the provision.

The New York Times noted last fall that the hold-harmless provision, by protecting most beneficiaries, exposed some to higher increases: “If premiums are frozen for 70 percent of beneficiaries, premiums for the other 30 percent must be raised more to cover the expected increase in overall Medicare costs. In other words … the higher Medicare costs must be spread across a smaller group of people.”

Congress, seeing a dynamic in which some seniors could face a nearly 50% increase in premiums, crafted a provision to forestall such a high and sudden spike. The Bipartisan Budget Act capped Part B premium increases for 2016, paid for by a loan from the Treasury that would be repaid by seniors in future years.

The legislative language used, however, allows premium spikes to come back with a vengeance. The Bipartisan Budget Act provided that the Medicare Part B “smoothing” provision would be renewed in 2017—but only if Social Security beneficiaries received no cost-of-living adjustment at all. The trustees report out Wednesday says that beneficiaries are projected to receive a very modest adjustment: 0.2%. Although that change is relatively small, it means that the “smoothing” provisions in last year’s budget deal do not apply—and, as the Wednesday Medicare report notes, premiums for some beneficiaries “need to be raised substantially,” up to nearly $150 per month.

Before the trustees’ report was released, some experts had predicted that a series of payment reductions by the Independent Payment Advisory Board (IPAB) under Obamacare would spark talk of “death panels” in political campaigns this fall. Spending levels did not require the board to convene, making that issue moot for now. But that doesn’t mean that Medicare won’t be an issue on the campaign trail. Democrats raised the Part B premium issue last year; expect to hear much more about it before November.

This post was originally published at the Wall Street Journal Think Tank blog.

House “Doc Fix” Bill Makes Things Worse, Medicare Analysis Finds

Proponents of the “doc fix” legislation the House passed before Congress’s Easter recess have argued that it would permanently solve the perennial issue of physician reimbursements in Medicare. But an analysis by Medicare’s nonpartisan actuary all but cautions: “Not so fast, my friends!

The estimate of the legislation’s long-term impacts by Medicare’s chief actuary is sober reading. The legislation provides for a bonus pool that physicians can qualify for over the next 10 years but applies only in 2019 to 2024. The budgetary “out-years” provide for minimal increases in reimbursement rates. Beginning in 2026, physicians would receive a 0.75 percent annual increase if they participate in some alternative payment models or a 0.25 percent annual increase if they do not. Both are significantly lower than the normal rate of inflation.

Such paltry increases could have daunting effects over time. “We anticipate that payment rates under [the House-passed bill] would be lower than scheduled under the current SGR [sustainable growth rate formula] by 2048 and would continue to worsen thereafter,” the report said. By the end of the 75-year projection, physician reimbursements under the House-passed bill would be 30% lower than under the SGR. Critics have called the current system unsustainable, but over time the House bill’s “fix” would result in something worse.

The actuary said that the inadequacies of the House-proposed payment increases “in years when levels of inflation are higher.” Under the House-passed bill, physicians would receive a 2.3% increase in reimbursements over a three-year period. According to the Bureau of Labor Statistics, the inflation rate was 11.3% in 1979, 13.5% in 1980, and 10.3% in 1981. If high inflation returned, doctors could effectively receive a pay cut after inflation.

While physician groups are clamoring to avoid the 21% cut that would take effect this month if some sort of “doc fix” is not enacted, the House’s “solution” could result in larger real-term cuts in future years. Medicare’s chief actuary explains the results of these reimbursement changes over time:

While [the House-passed bill] addresses the near-term concerns of the SGR system, the issues of inadequate physician payment rates are ultimately greater….[T]here would be reason to expect that access to physicians’ services for Medicare beneficiaries would be severely compromised, particularly considering that physicians are less dependent on Medicare revenue than are other providers, such as hospitals and skilled nursing facilities.

In sum, “we expect that access to, and quality of, physicians’ services would deteriorate over time for beneficiaries.”

The House “doc fix” legislation involved increasing the deficit by $141 billion, purportedly to solve the flaws in Medicare’s physician reimbursement system. But Medicare’s actuary thinks this legislation will make the long-term problem worse. When will Congress figure out that if you’re in a fiscal hole, it’s best to stop digging?

This post was originally published at the Wall Street Journal Think Tank blog.

Obamacare’s Tax on Charity

Amidst the debate over tax policy associated with the fiscal cliff, the Washington Post ran a column yesterday calling the deduction for charitable contributions “indispensable,” because it encourages private giving, “an economic benefit we can’t afford to mess with.”

Problem is, Obamacare already DID mess with the charitable deduction – because for “high-income” individuals, charitable contributions will be taxed, beginning January 1.  Per Section 1402 of the reconciliation bill amending Obamacare, the law’s new 3.8% tax on “high-income” individuals is assessed on filers’ adjusted gross income – that’s income BEFORE deductions like those for charitable contributions are taken into account.  Individuals subject to the 3.8% tax will pay the tax on all income they receive, regardless of whether or not they donate that income to charity.  For instance, a lottery winner who wanted to donate half of his $500,000 winnings to charity would pay $9,500 ($250,000 times 3.8%) for the “privilege” of doing so.

What’s worse, this tax will hit more and more individuals over time – because the “high-income” thresholds are not indexed for inflation.  The Medicare actuary has predicted that the tax will hit only 3 percent of filers when it goes into effect next year, but nearly 80 percent of filers in the long term.

So rather than encouraging charitable contributions, Obamacare actively works to discourage them – perhaps because liberals can’t stand the thought of entities other than government engaging in service for the public good.  It’s enough to put a “Bah, humbug!” into anyone’s holiday spirit.

Liberals Should “Cut” Out Their Medicaid Nonsense

Paul Krugman’s Monday New York Times column featured a typical rant – typical not least because it’s just plain wrong.  He talks about the “savage cuts” associated with conservative proposals to block grant Medicaid – except the “cuts” don’t actually exist.

Don’t believe me?  Well, take a look at this chart from the Kaiser Family Foundation’s study on Medicaid, issued last week.  The red line below illustrates the supposed “cuts” associated with block grant proposals – and shows that such “cuts” don’t actually exist, because Medicaid spending will increase each and every year under a block grant:

What’s particularly striking about the above chart is that the Kaiser study modeled a block grant proposal that was less generous than Governor Romney’s plan – the House-passed budget linked the growth of the block grant to inflation, whereas Governor Romney’s plan links the growth of Medicaid to inflation plus one percent.  So the Kaiser researchers, even as they claimed that their modeling was based on a plan “similar to Governor Romney’s,” cherry-picked (false) assumptions in order to portray block grants in the worst possible light.  This partisan hackery also explains why the Kaiser study uses the term “cut” no fewer than 60 times in one 22-page paper – even though both the House-passed budget and Governor Romney’s proposal do NOT reduce Medicaid spending in absolute terms.

Appearing before Congress last year, Secretary Sebelius testified that the Administration believes Obamacare did not “cut” Medicare – it merely slowed the program’s growth rate.  If that’s the case, the Secretary, the Administration, and their liberal allies should adopt a truly novel concept – consistency – and not argue that a slowdown in Medicare’s growth rate under Obamacare is not a “cut,” while a slowdown in Medicaid’s growth rate is a “cut.”

“Medicare Quantitative Easing:” Sebelius Channels Ben Bernanke

The Administration announced today its projection that Medicare Advantage enrollment will rise next year.  What it did NOT mention in its announcement is why the program’s enrollment may climb: Because of a Medicare Advantage demonstration program costing more than $8 billion, and implemented solely by executive fiat, that looks suspiciously like an attempt to avoid the effects of Obamacare’s $300 billion in Medicare Advantage cuts prior to the 2012 election.  In other words, even as the Administration implements the cuts with one hand, its demonstration program – which amounts to a three-year Obamacare waiver for seniors – temporarily undoes the cuts with the other, because Secretary Sebelius has decided to spend an additional $8 billion purely on her say-so.

This attempt by the Administration to essentially print money so its Medicare Advantage problem goes away before the 2012 election has not escaped criticism.  Both the Medicare Payment Advisory Commission and the Government Accountability Office have raised serious questions about the demonstration program.  One report by GAO suggested the program may exceed the Administration’s statutory authority.  The Associated Press also reported on the Medicare Advantage demonstration last year, noting that the program “could head off service cuts that would have been a [political] headache for Obama and Democrats in next year’s elections.”  Even a former Democrat staffer who worked in the Clinton Administration admitted that the effort amounted to a political stunt: “It’s fair to say that [Medicare] could not tolerate dislocation, given the political climate.”

Some conservatives have criticized Chairman Bernanke’s latest efforts at quantitative easing, noting that the Federal Reserve’s initiatives to print money could prove difficult to unwind in the longer term and lead to inflation.  Likewise, Secretary Sebelius’ efforts to print $8 billion to solve a political problem could prove the tip of the iceberg in its long-term fiscal effects.  The Administration assumes all the Medicare spending reductions will go into effect, but the Medicare Advantage demonstration program illustrates how the Obama White House has already reversed one of the major spending reductions – the Medicare Advantage cuts – to fend off political dissent during the President’s re-election campaign.  So either seniors will lose access to Medicare Advantage plans, the Obama Administration will continue to undo the cuts – thus causing the deficit to increase – or some combination of the two will take place.  Either way, Secretary Sebelius’ “political quantitative easing” when it comes to Medicare Advantage is not likely to end well for seniors, or for taxpayers.

President Obama’s Twofold Dishonesty on Cutting Medicare Benefits

Amidst the debate on the campaign trail, there’s been a lot of heated rhetoric of late about Medicare “benefits” and who’s doing what (or not) to them.  For instance, in a recent speech the President said that “I’ve proposed reforms that will save Medicare money by getting rid of wasteful spending in the health care system.  Reforms that will not touch your Medicare benefits.”

There’s only one problem: That statement is flat-out FALSE.  The President HAS enacted cuts to Medicare benefits – namely, additional means-testing in Obamacare – and proposed even more Medicare benefit cuts.  For instance, in his budget submitted to Congress this spring, the President proposed:

  • Increasing means-tested premiums under Parts B and D by 15%, and freezing the income thresholds at which means testing applies until 25 percent of beneficiaries are subject to such premiums;
  • Increasing the Medicare Part B deductible by $25 in 2017, 2019, and 2021;
  • Introducing a home health co-payment of $100 per episode in cases where an episode lasts five or more visits and is NOT proceeded by a hospital stay; and
  • Imposing a Part B premium surcharge equal to about 15 percent of the average Medigap premium – or about 30 percent of the Part B premium – for seniors with Medigap supplemental insurance that provides first dollar coverage.

The problem is not necessarily the policy proposals for these particular benefit cuts, which many may find meritorious.  The Medicare Payment Advisory Commission (MedPAC) has previously recommended introducing home health co-payments as a way to ensure appropriate utilization.  Congresses controlled by both Republicans and Democrats have enacted some (limited) means-testing in Medicare.  And Medigap reform has been an element of bipartisan proposals to extend Medicare’s solvency and make the program more efficient.

Instead, the fundamental problem is the President’s twofold dishonesty when it comes to cutting Medicare benefits.  First, in saying that he hasn’t proposed cutting Medicare benefits when he has.  Second, and just as importantly, in the way he has proposed cutting those benefits – all the benefit changes the President proposed in his budget would not take effect until 2017, after he leaves office.  Just like with the Cadillac tax – scheduled to take effect in 2018 – or the massive changes to Exchange insurance subsidies that will make health care less affordable after 2019, Barack Obama wants to give away all the government “goodies” while he’s in office – and stick the next President with the bill after he leaves.  That’s not leadership; that’s the antithesis of leadership.

Liberals Believe IPAB Is the “Medicare Fairy”

The Center for American Progress recently released a paper making incoherent claims against conservative proposals for entitlement reform.  Take for instance the below paragraphs criticizing the Medicare premium support proposal included in the House-passed budget:

The House Republican premium support plan would also limit growth in Medicare spending to growth in the economy plus 0.5 percentage points.  But it’s unclear how this cap would be enforced.  As a result, it’s likely that the cap would be enforced by limiting the amount of vouchers provided to beneficiaries.  Since the proposed growth rate is much slower than the projected growth in health care costs, the voucher would leave beneficiaries to pay substantially more over time.  The CBO estimates that new beneficiaries could pay more than $1,200 more (in 2011 dollars) by 2030 and more than $5,900 more by 2050 under the House Republican budget.

What’s more, the Affordable Care Act already established an Independent Payment Advisory Board that will control the growth in Medicare spending.  While the target growth rate for the independent panel is growth in the economy plus 1 percentage point, the president has proposed reducing that growth rate to growth in the economy plus 0.5 percentage points—the same growth rate as the cap under the House premium support plan.

The premium support budget cap, therefore, would produce little or no savings compared to the president’s alternative approach.  But the cap under the premium support plan would have serious consequences for Medicare beneficiaries.

The CAP paper admits that under the House budget plan, Medicare would grow at the same rate as under the President’s budget.  But to CAP, the House premium support proposal would result in seniors paying thousands of dollars more in costs – while under the President’s budget, Medicare would grow at the exact same rate, but seniors would miraculously avoid paying higher costs, and still have the same access to care.  To some, this argument brings to mind the old phrase, “That dog won’t hunt.”

The premise behind these claims lies in CAP’s belief that only government – through Obamacare’s new Independent Payment Advisory Board and its rulings capping Medicare spending – can reduce health costs.  This belief can be found elsewhere in the paper, where CAP states that “traditional Medicare cannot provide an integrated benefit package…modify benefit designs, or offer provider network options” – all things that generally reduce health care costs – only to turn around and claim that “increasing the privatization of Medicare does not make sense because traditional Medicare costs less than comparable private coverage.”  It’s almost as if CAP believes a “Medicare fairy” can magically erase higher costs in a completely pain-free way that doesn’t affect seniors’ health care.

The problem is, most experts don’t believe CAP’s magical “Medicare fairy” exists.  An analysis from CBO released in January found that most Medicare demonstration programs implemented over the years “have not reduced Medicare spending: In nearly every program involving disease management and care coordination, spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program, when the fees paid to the participating organizations were considered.”  And both CBO and the Medicare actuary have concluded that Obamacare’s IPAB-driven spending reductions won’t work either: CBO concluded that the Medicare reductions will be “difficult to sustain for a long period,” and the Medicare actuary found that provisions in Obamacare “are unlikely to be sustainable on a permanent annual basis.”  The actuary went so far as to estimate that the law will cause 40 percent of hospitals and medical providers to become unprofitable in the long term.

While Democrats’ government-centric “Medicare fairy” approach has been weighed over the years and found wanting, the conservative idea that competition can help lower costs has never been truly explored.  As we noted last week, even the Obama Administration admits that competition has generated savings for parts of the Medicare program.  So instead of waiting around for a “Medicare fairy” that will never show up, why not empower patients instead of bureaucrats, and use competition to reduce costs in health care the same way it has in every other industry?

How Obamacare Just Became LESS Affordable for Millions of Americans

Hidden in CBO’s updated analysis of Obamacare in light of the Supreme Court decision is new information about a little-known provision of the law that will have major effects on how much millions of Americans pay for government-mandated health insurance.  At issue is an Obamacare provision, added during the reconciliation process, that slows the growth of Exchange insurance subsidies, beginning in 2019, if federal spending on said Exchange subsidies exceeds a pre-determined limit.  In its analysis last week, CBO concluded that the Supreme Court’s ruling means fewer people will obtain insurance through Medicaid, and more people will utilize subsidized insurance on Exchanges instead.  As a result, projected spending on Medicaid fell by $289 billion, and projected spending on Exchange subsidies rose by $210 billion.

These changes mean the indexing provision slowing subsidy growth is virtually bound to be triggered beginning in 2019.  The statute calls for the indexing provision to kick in if subsidy spending exceeds 0.504% of gross domestic product in the preceding year.  As the below chart demonstrates, in CBO’s March 2012 baseline, Exchange subsidy spending* was just slightly above the 0.504% of GDP level – meaning that while it was possible the indexing provision would be triggered, it was also possible it would not be, depending upon general cost trends, how many people enroll in Exchanges, etc.  However, the projected 20-25% increase in Exchange subsidy spending as a result of the Court ruling now virtually guarantees the subsidy indexing provision will be triggered beginning in 2019:

  Exchange Subsidy Spending March 2012 (in billions) Exchange Subsidy Spending July 2012 (in billions) Estimated GDP by Calendar Year 

(in billions)

March 2012 Percentage of GDP July 2012 Percentage of GDP
2018 106 129                              20,897 0.507% 0.617%
2019 111 137                              21,859 0.508% 0.627%
2020 116 141                              22,853 0.508% 0.617%
2021 124 148                              23,870 0.519% 0.620%
2022 129 155                              24,921 0.518% 0.622%

While this indexing provision may seem obscure, CBO admitted last month in its long-term budget outlook that it will have a major impact on millions of Americans forced to buy health insurance:

After 2018, however, an additional indexing factor will probably apply; if so, the shares of income that enrollees have to pay will increase more rapidly than in the preceding years, and the shares of the premiums that the subsidies cover will decline….A smaller percentage of people will be eligible for subsidies over time because incomes are projected to increase more quickly than the eligibility thresholds, and federal subsidies will cover a declining share of the premiums over time because of the additional indexing factor described above.

According to CBO, if Obamacare is not repealed or amended, virtually all Americans will be forced to buy health insurance – but fewer and fewer individuals will qualify for insurance subsidies over time, and those subsidies will pay a smaller and smaller share of overall insurance premiums.

Given CBO’s analysis last week, it is virtually certain that this long-term “time bomb” will detonate on millions of American families beginning in 2019.  The real question now is:  What does President Obama want to do about it?  Does he want to force Americans to buy a product that will not be affordable for many of them?  Does he want to repeal this subsidy indexing provision – thus blowing a hole in Obamacare’s supposed deficit savings?  Or does he want to ignore the issue entirely, hope the American people do the same, and dump this fiscal time bomb on the next President in 2019, hoping someone else will fix a budgetary mess he created?


* Note that the March baseline figures cited above reflect calendar-year spending, as do the GDP numbers (taken from Table E-1 of CBO’s January economic baseline).  The formula in Section 1401(a) of the statute requires that the determination whether subsidy spending exceeds 0.504% of GDP be made on a calendar-year basis.  CBO has not yet released updated calendar-year numbers since the Supreme Court ruling, and the chart above therefore uses fiscal-year data for the updated spending projections.  However, the general point still remains that the higher spending on subsidies in light of the ruling makes it a virtual certainty the indexing provisions will be triggered.

Ezra Klein’s Incomplete and Misleading Claims on Obamacare Taxes

Liberal blogger Ezra Klein this morning drafted a post that claims Obamacare is only the 10th largest tax increase in American history, because it raises “only” 0.49 percent of GDP.  The problem is that this claim only focuses on the first ten years of the law – which gives a misleading impression.  In its 2010 long-term budget outlook, here’s what the Congressional Budget Office said would be the fiscal impact in the longer term (page 61):

Under the extended-baseline scenario, the impact of the legislation on the revenue share of GDP would rise over time, CBO estimates, boosting revenues by about 1.2 percent of GDP in 2035 and by a larger amount after 2035; most of the increase that is projected to occur after 2035 is attributable to the excise tax on high-premium health insurance plans.

All tax increases are subject to some “bracket creep,” but in this case CBO estimates that Obamacare’s tax increases will more than double as a share of GDP between 2019 and 2035 – and will continue to grow thereafter.  That’s because the law’s biggest tax increases are designed to grow larger and larger over time:

  • The “Cadillac tax” on high-cost health plans isn’t scheduled to take effect until 2018.  But because the tax is linked to general inflation, and not medical inflation, it will hit more and more health plans over time – not just “Cadillac” insurance plans, but “Chevy” plans and even “Yugo” health plans.  That’s why CBO projects the impact of the Cadillac tax will continue to grow even after 2035, as noted above.
  • The “high-income” surtax is not indexed for inflation at all – it’s designed to hit more and more middle-income families every year.  Page 87 of the 2010 Medicare trustees report notes that the tax will hit only 3 percent of workers next year, when the tax takes effect – but a whopping 79 percent of all workers by 2080.

There’s certainly an argument to be made that, just as the President Obama avoided calling the individual mandate a tax for political reasons, the law was deliberately structured to back-load the major “pay-fors” – including the tax increases – to have them implemented on some future President’s watch.  The law’s Cadillac tax on health benefits doesn’t take effect until 2018; the law reduces spending on Exchange subsidies, but only beginning in 2019; and the Congressional Budget Office and Medicare actuary both believe the law’s Medicare spending reductions will be unsustainable after 2022 and 2019, respectively.  Does anyone believe the fact that all these onerous “pay-fors” will kick in just a few years after a putative Obama second term is a coincidence?

Therein lies the fundamentally misleading nature of Klein’s claims.   Just last week he noted as “fact” the claim that “As time goes on, the savings are projected to grow more quickly than the spending, and CBO expects that the law will cut the deficit by around a trillion dollars in its second decade.”  Do you see what he’s doing?  He’s citing the low tax increase number NOW to claim the law isn’t the largest tax increase in history.  But he’s using the deficit reduction LATER to claim the law is a major fiscal saver.  But the only way the law will get the purported deficit savings LATER is by implementing the largest long-term tax increase in history – if the tax increases get even slightly scaled back, Obamacare will raise the deficit.

Go back to the chart Klein uses to make his point.  That chart assumes the law raises taxes by “only” about 0.5% of GDP.  But if you use CBO’s longer-term estimate of 1.2% of GDP, then Obamacare’s tax increases are outmatched only by revenue measures enacted during the Korean war – several of which were temporary in nature.  That would make Obamacare the largest tax increase in modern history; the largest peacetime tax increase in history; and the largest permanent tax increase in history.

Klein has a history in recent weeks of cherry-picking facts to support his liberal positions, and side-stepping those that undermine his philosophical views.  But ultimately, he can’t have it both ways.  At minimum, Obamacare is either the largest tax increase in history, or will raise the deficit by significant sums.  Pick one, and be honest and up-front about it.

CBO Report Exposes New Facet of Obamacare’s Unsustainable Spending

The Congressional Budget Office released its long-term budget outlook today, and the results can be summed up in two words: We’re broke.

According to CBO, federal spending on health care will reach 10.7 percent of GDP in 2037 – and 18.3 percent of GDP by 2087, up from 5.4 percent this year.  In other words, within one generation, one in ten dollars in the American economy will be devoted to federal government spending on health care programs – and that number will rise to nearly one in five dollars within the lifetimes of children born today.  These projections are based on CBO’s alternative fiscal scenario – which in many respects represents a more realistic version of long-term fiscal outcomes, as it follows Stein’s Law and assumes policies that “might be difficult to sustain over a long period” won’t be.

CBO had already assumed that several policies in Obamacare – notably, the productivity adjustments to hospitals and the payment reductions to be implemented by a board of unaccountable bureaucrats – would not be sustained over the longer term.  But in a paragraph located on page 57 of today’s report, CBO outlines yet another way Obamacare’s spending will be unsustainable:

CBO assumed that two policies that affect the number of people receiving different amounts of subsidies and that might be difficult to sustain over a long period would be altered in the extended alternative fiscal scenario.  First, CBO assumed that the eligibility thresholds would be modified after 2022 such that the shares of the population with incomes corresponding to the various ranges of subsidies remained constant.  Second, CBO assumed that the additional indexing factor described above would have no effect after 2022, so federal subsidies would cover a constant share of the premiums per enrollee over time.

To put it in plain English:  According to CBO, if Obamacare is not repealed or amended, virtually all Americans will be forced to buy health insurance – but fewer and fewer individuals will qualify for insurance subsidies over time, and those subsidies will pay a smaller and smaller share of overall insurance premiumsCBO’s alternative fiscal scenario therefore assumes that spending on Obamacare insurance subsidies will be GREATER than current law projections – because CBO presumes that policy-makers will not be able to tolerate individuals being forced to buy health insurance who will not be able to afford the premiums given the subsidy regime scheduled to take effect under current law.

In its prior writings, CBO had assumed that spending on subsidies will eventually have to rise above current law projections, because the level of subsidies themselves would prove insufficient.  However, today is the first time CBO has stated publicly that Obamacare will cause what amounts to a new form of “bracket creep” – whereby smaller and smaller shares of the population will be eligible for subsidies.  The revelation in today’s report represents just the newest way in which Obamacare’s actual level of spending has proven to be far greater than initially advertised – a fiscal “bait and switch” that will cripple future generations of taxpayers with crushing debt.