During tonight’s address to Congress, President Obama is expected to repeat his contention that health care reform should reduce federal health care costs and not expand the budget deficit. The House health bill (as amended by the Energy and Commerce Committee) fails those standards according to a new Lewin Group study commissioned by the Peter G. Peterson Foundation. According to the study, the House bill:

  • Would run a $39 billion deficit in the first decade, and a $1,010 billion deficit in the second decade;
  • Faces a gross cost (excluding tax increases and Medicare and Medicaid reforms) of $858 billion in the first decade, and $2,893 billion in the second decade; and
  • Would raise taxes by $588 billion in the first decade and $1,148 billion in the second decade.

President Obama has engaged in a rhetorical sleight-of-hand by asserting that the House bills’ (alleged) deficit neutrality proves that it meets his standard of not increasing federal health spending. Not only is the House bill not deficit-neutral, the vast majority of its savings are from tax increases. In fact, the bill increases federal health spending by $2.4 trillion over twenty years (and would also likely raise private health spending).

Given the President’s budget proposal of trillion-dollar deficits, as well as the $43 trillion unfunded obligation in Social Security and Medicare, adding another expensive new health care entitlement is completely irresponsible. Any savings in Medicare and Medicaid should go towards reducing these staggering long-term obligations. And the tax increases in this legislation would be in addition to the massive tax increases that many liberals already advocate to close long-term deficits.

Lawmakers should go back to the drawing board and produce health care reforms that actually reduce costs based on real choice, competition and transparency.