CBO on effect of defunding ACA implementation

CBO has sent a letter to Rep. Waxman addressing his question about

…budgetary effects of legislation that would permanently prevent the use of appropriated funds to implement the Patient Protection and Affordable Care Act of 2010 (PPACA) and provisions related to health care in the Health Care and Education Reconciliation Act of 2010, Public Laws 111-148 and 111-152, respectively.

In short, CBO is addressing what could happen if we permanently defund implementation of the PPACA? CBO notes a great deal of uncertainty in assessing the effects of permanent defunding because some aspects of the law have been implemented, others will be implemented absent any more action, while others will be implemented but need adminstrative oversight to function properly. They are even unsure of whether it would on net increase or decrease the deficit. CBO does provide some guidance on the types of things that could occur with a permanent defunding of PPACA implementation:

A permanent prohibition on the use of discretionary funding to implement PPACA and the Reconciliation Act would have some effects that would reduce the federal deficit and others that would increase the federal deficit. For example, such a prohibition could:
• Prevent CMS from modifying Medicare’s payment rates on an annual basis;
• Preclude CMS from engaging in the rate-setting process and signing contracts with the private insurers that offer Medicare Advantage and Part D (prescription drug) plans;
• Preclude the Secretary of HHS from implementing recommendations of the Independent Payment Advisory Board (IPAB), aimed at limiting Medicare costs;
• Prevent enforcement of the mandate for U.S. residents to obtain health insurance;
• Prevent the federal government from setting up insurance exchanges if states chose not to establish them;
• Preclude CMS from issuing guidance or offering technical assistance to states on expanding their Medicaid programs to newly eligible people;
• Prevent CMS from assessing and collecting its share of higher rebates from pharmaceutical manufacturers for drugs dispensed to Medicaid beneficiaries; and
• Bar the IRS from modifying forms, instructions, and publications to reflect changes in tax law.

Opponents are of course welcome to be opposed, and to repeal the law outright, or replace it with something else. Or even to modify the existing law. To let it stand yet defund it is likely to have many unintended consequences and doesn’t make much sense.

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