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Do Republican critiques of the healthcare law add up?

Healthcare Q&A

As they campaign to repeal the law, they argue that it will hurt the job market and add to the federal budget deficit.

January 18, 2011|By Noam N. Levey, Washington Bureau

Reporting from Washington — In their campaign to repeal the healthcare overhaul President Obama signed last year, Republicans have leveled two sweeping critiques of the law: its impact on the job market and on the federal budget deficit. Here's a rundown of how some of the rhetoric matches up with reality.

Why do Republicans say the law will kill jobs?

Many businesses will face new regulations, including rules dictating that their health plans eliminate lifetime limits, waive co-payments for preventive care and allow parents to keep children as old as 26 on their policies.

Starting in 2014, businesses with more than 50 employees will also face a penalty if they do not provide their workers with a health plan that covers a minimum set of benefits and does not cost more than 9.5% of a worker's household income.

Will that mean fewer jobs?

Some analysts have estimated those rules could depress hiring because they would create a quirky incentive not to hire: Businesses could avoid the additional regulation by keeping their payrolls below 50, or by avoiding low-wage workers who might not be able to afford a health plan.

But several studies — including one by the respected Lewin Group — suggest any job loss would be minimal and would be at least partially offset by new jobs created as the healthcare system expands to care for tens of millions of Americans expected to gain coverage.

What about Republican assertions that studies show hundreds of thousands of jobs at risk?

They are quite misleading. As outlined by the nonpartisan Factcheck.org, one study by the conservative National Federation of Independent Business that an estimated 1.6 million jobs would be lost did not analyze the new law. Instead, it examined an alternative that did not exempt small businesses from the mandate.

And a second report by the Congressional Budget Office does not indicate that 650,000 jobs will be lost, as Republicans have claimed. The CBO concluded that the new law might prompt many Americans, including those approaching retirement, to stop working because they would no longer need a job to get health insurance, a key benefit of the law.

What about the law's effect on the budget deficit?

The CBO, which lawmakers from both parties rely on to assess the effects of legislation, now estimates that the law would bring down the deficit over the next decade by more than $200 billion.

That is possible because the authors of the legislation offset the cost of expanding coverage to 32 million Americans over the next decade with more than $500 billion in cuts to federal Medicare spending and more than $400 billion in new taxes and fees.

But isn't that misleading because the cuts take place and tax revenues start coming in before the law requires a lot of new spending?

No. The CBO estimates that the law will actually cut the deficit even further after 2020, when all the spending is going on.

Does the CBO really count everything?

No. Budget analysts did not account for all costs associated with the new law, including some grants and implementation expenses that may not be funded by Congress.

Some revenues in the law — including a tax designed to fund a new insurance program for long-term care — are counted, even though they do not fund the health overhaul.

And Medicare cuts are counted toward reducing the deficit, even though administration officials also cite those cuts to claim that Medicare is being put on a more stable financial footing.

Isn't there some question whether all these cuts will happen?

Yes. Some independent analysts, including the chief actuary at the Department of Health and Human Services, have questioned whether Congress will actually implement all of the Medicare cuts and tax hikes necessary to keep the law from deepening the deficit.

So, is the CBO's estimate realistic?

That's hard to say. Lawmakers in the past have indeed shied away from making politically difficult Medicare cuts. But at other times, Democrats and Republicans have cut quite aggressively.

noam.levey@latimes.com

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