One of the more controversial pieces of legislation to dominate the headlines and political discussion has been the Affordable Care Act. President Barack Obama's signature legislation was touted as a way for all Americans to receive affordable health care. With a high participation rate, associated health care costs would come down.
During a recent speech at Northwestern University, Obama discussed the ACA, also known as Obamacare, and the positive effects he said it was having. Obama said that because of the ACA, out that as a result of the ACA reduced costs for the government has led to an unintended benefit: a reduction in the deficit. President Obama said this:
"Partly because health care prices have been growing at the slowest rate in nearly 50 years, the growth in what health care costs the government is down. Health care has long been the single-biggest driver of America’s future deficits. It’s been the single biggest driver of our debt. Health care is now the single biggest factor driving down those deficits."
The staff at PolitiFact checked to see if the president was right when he said the deficit was coming down because of health care costs. Reporter Joshua Gillin says that Obama's claim rates MOSTLY TRUE. Gillin says that for the most part Obama is pretty accurate with his claim.
"Before we take a look at the claim, we should look at how the government measures economic indicators," Gillin said. "The budget deficit is the difference between what the government takes in tax revenues and what it spends, and that is a percentage of the Gross Domestic Product, which itself is a measure of overall economic activity. Back in 2010, the Congressional Budget Office said that government health care spending was going to drive the deficit up to 10 percent of GDP. However, after the Affordable Care Act has taken effect, the deficit has actually come down quite a bit."
Gillin said that the Affordable Care Act may play a part in this, but it shouldn't be solely credited for the reductions.
"Experts we talked to said that health care costs were growing at a slower rate before the ACA took effect," Gillin said. "Now, did the ACA play a part in this? Maybe, but it was probably a negligible part because those health care cost trends have been projecting downward for years, and Obamacare has only been in effect for a year."
Gillin also said that there were other contributing factors, including the government cutting spending in other areas. However, because the projected health care costs are dropping, it is leading to a deficit reduction, leading PolitiFact to rate Obama's claim MOSTLY TRUE.
SOURCES: Health care costs cutting the deficit?
- PolitiFact ruling
- White House, Remarks by the President on the Economy -- Northwestern University, Oct. 2, 2014
- Congressional Budget Office, letter to Rep. Nancy Pelosi, D-Calif., March 20, 2010
- CBO, "The Budget and Economic Outlook: 2014 to 2024," Feb. 4, 2014
- CBO, "Updated Budget Projections: 2014 to 2024," April 2014
- CBO, Senate Committee on the Budget hearing testimony, June 10, 2014
- CBO, "The 2014 Long-Term Budget Outlook," July 15, 2014
- CBO, "The Long-Term Budget Outlook," Dec. 2007
- Associated Press, "CBO: Deficits to drift lower on lower health costs," April 14, 2014
- Email interview, White House spokeswoman Jessica Santillo, Oct. 3, 2014
- Email interview, Jeffrey Clemens, University of California - San Diego economics professor, Oct. 6, 2014
- Email interview, Mark McClellan, Brookings Institution senior fellow, Oct. 6, 2014
- Email interview, Henry Aaron, Brookings Institution senior fellow, Oct. 6, 2014
- Email interview, David Rosnick, Center for Economic and Policy Research economist, Oct. 6, 2014
- Email interview, Paul Van de Water, budget expert at the Center on Budget and Policy Priorities, Oct. 6, 2014