The Congressional Budget Office’s conclusion today that sacking Obamacare would swell the budget deficit by as much as $353 billion wasn’t at all what Republicans were expecting.

Using so-called dynamic scoring, which attempts to account for the economic effects of policy changes, a repeal would still hit the deficit, although by less — about $137 billion, CBO said.


Junking President Barack Obama’s signature health care plan would generate savings by ending insurance subsidies to millions of Americans, CBO said. But those savings would be more than offset by reversing the law’s cuts to Medicare as well as its various tax increases, including a new levy on high-cost insurance plans, the agency said.

It also found that a repeal would boost economic growth by an average 0.7 percent over the next decade, while increasing the ranks of the uninsured next year by 19 million.

Republican reaction focused on the positive economic impact and played down the deficit implications.

The analysis is the first of the health care law under newly installed CBO Director Keith Hall, whom Republicans appointed in February amid complaints over how his predecessor had analyzed the Affordable Care Act.

The projected budget hit of a repeal is actually bigger than what Hall’s predecessor, Doug Elmendorf, had forecast. In 2012, the last time the agency considered the budgetary impact of repeal, Elmendorf said rescinding the law would increase the deficit by $109 billion over a decade.

The report comes as lawmakers, industry groups and others await a Supreme Court decision on whether to void some of the law’s insurance subsidies, which could unravel much of the program.

In a statement, Senate Budget Committee Chairman Mike Enzi emphasized the report’s findings on the economic benefits of repeal, while making little mention of the projected deficit hit.

“CBO has determined what many in Congress have known all along,” he said. “This law acts as an anchor on our economy by dragging down employment and reducing labor force participation.”

Those on the other side of the divide over Obamacare cheered CBO’s findings.

“Any way you slice it, repealing the Affordable Care Act will add hundreds of billions of dollars to the deficit,” said House Minority Leader Nancy Pelosi. “Republicans should look at the numbers and finally end their fixation with repealing this historic law.”

The estimate will make it harder for Republicans to use so-called reconciliation to repeal the law because congressional budgeting rules bar lawmakers from using the parliamentary maneuver to move legislation that adds to government red ink.

A repeal would save $1.15 trillion by canceling subsidies aimed at expanding health insurance coverage, the report said. But that would be more than offset by undoing cuts in payments to insurance companies, hospitals and others. That would increase projected spending by $879 billion. Canceling the law’s tax increases, meanwhile, would reduce projected tax receipts by $631 billion, the CBO said.

Dumping the law would boost the economy by increasing labor participation, which jibes with what the CBO had found under Elmendorf.

The agency predicted last year that the law would reduce the labor force by some 2 million workers, in part because some people would quit their jobs if they didn’t have to rely on employers for insurance. Also, the law phases out insurance subsidies for people who make more money, which CBO had said creates a disincentive to work. Economists call that effect an “implicit tax.”

CBO confirmed those findings today.

“The subsidies and tax credits for health insurance that the ACA provides to some people are phased out as their income rises — creating an implicit tax on additional earnings — and those subsidies, along with expanded eligibility for Medicaid, generally make it easier for some people to work less and to stop working without losing health insurance coverage,” the report said. “Repealing the ACA would reverse those effects.”

CBO downplayed the differences between today’s estimate and its 2012 forecast.

For one thing, the agency said, it’s examining the law over a different period. The office analyzes a proposal’s budgetary effects over a decade, which in 2012 was between 2013 and 2022. Now, it’s looking at 2016 through 2025, when the law will have phased in more fully.

Also, health care costs are not growing as quickly as experts had expected, which means rescinding the Obamacare insurance subsidies is not projected to save as much money.

“The changes in projections of per capita spending on health care have lowered the total cost for any given year of subsidizing coverage through the exchanges or Medicaid; correspondingly, the gross and net savings estimated to result from repealing the ACA’s insurance coverage provisions are smaller,” CBO said.

Rachana Pradhan contributed to this report.