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Runaway Obamacare Spending Will Cost Democrats

Lanhee Chen is a research fellow at the Hoover Institution who also teaches public policy at Stanford University. He was the policy director of Mitt Romney's 2012 presidential campaign.
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As we start the final stretch before the midterm elections, many analysts are convinced that Obamacare isn't the hot political issue it once was. While the flood of negative publicity about the law has subsided of late, a majority of people still oppose it, according to a Real Clear Politics average of polls taken from Sept. 2-15. And I’ve always believed the voters’ negative impressions of the law were “baked” into their assessments of Democratic incumbents.

That’s partly why Democratic Senators such as Kay Hagan of North Carolina, Mark Pryor of Arkansas and Mark Begich of Alaska find themselves barely breaking 40 percent in recent public polls. 

But a new study out this week from Bloomberg Government threatens to bring the Affordable Care Act back to center stage -- and in a way that will likely hurt the electoral chances of incumbent Democrats, all of whom voted for the law. 

The study found that federal spending on Obamacare and related legislation has far exceeded anyone’s estimates (or imaginations). To date, the report concludes that the health-care law has cost taxpayers $73 billion. And that number doesn’t include projected spending on the law’s Medicaid expansion, which if included would bring costs to more than $90 billion. The study’s estimate is even higher than the Congressional Budget Office’s “high” cost projection for the law -- $71.2 billion by the end of 2014.

 The law’s troubled website, healthcare.gov, has cost taxpayers more than $2 billion, over twice the $834 million the Obama administration claimed it cost in an August 2014 report. The Bloomberg estimate is likely more accurate because it accounts for spending outside of the Department of Health and Human Services, for additional contracts to make repairs to the site, and for the costs related to paper backups needed due to the technical problems.

This is only the tip of the iceberg when it comes to spending on the coverage provisions of the Affordable Care Act. The Bloomberg study reveals that only about 20 percent of the $73.5 billion that has been spent on the health-care law thus far can be attributed to the law’s premium subsidies. CBO has estimated that the subsidies are expected to cost more than $650 billion through 2019, with the Medicaid expansion accounting for a minimum of $350 billion in additional spending.

The Bloomberg study reminds us of one of the many reasons why Obamacare remains generally unpopular: the concerns about its significant cost to taxpayers (notwithstanding the Democrats’ argument that it will reduce the deficit) and its impact on federal and state budgets going forward. In that sense, the study’s findings couldn’t have come at a worse time, as voters’ negative impressions of the law -- and of those who supported it -- could doom vulnerable incumbent Democrats in November.

Finally, even more bad news may be on the way. The Bloomberg study concludes that government computers still aren’t ready to process the exchange data needed either for the open-enrollment period beginning on Nov. 15 or for the 2015 tax season. That could mean another chaotic fall and winter for the already troubled law. For Democrats, the only saving grace may be that this set of calamities won’t likely occur until after the Nov. 4 election. 

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the editor on this story:
Katy Roberts at kroberts29@bloomberg.net