CBO: Obamacare repeal will reduce deficit by $337 billion

This post originally appeared at Institute to Reduce Spending.

The Congressional Budget Office has released their long-awaited score for the American Health Care Act—the ACA replacement legislation. The 37-page cost estimate details the spending implications of enacting this legislation, a report many members of Congress had wanted to see before the expected vote takes place.

CBO has determined that the new legislation would reduce outlays by $1.2 trillion and reduce revenues by $0.9 trillion. This would have a net reduction in the federal deficit of $337 billion over the next 10 years. Over the next five years, the deficit would grow about $9 billion, before dropping off by $337 billion over the 2017-2026 time frame.

One caveat is that this estimate is solely taking direct spending into account—CBO has yet to score the discretionary implications. These savings would largely come from a reduction in Medicaid outlays and the elimination of nongroup health insurance subsidies. The largest costs of the legislation would be from the elimination of much of the taxes and fees that were in the Affordable Care Act and a new tax-credit for health insurance.

This report is not immune to some important criticism, and CBO admits that there is uncertainty with the accuracy of the scoring because of the various factors that contribute to the costs. Between the insurance companies, states, individuals, federal agencies, employers, and so on, it’s difficult to get every prediction entirely accurate.

There are several reasons that fiscal conservatives should be cautious about this legislation — and it’s well worth noting that a full repeal would save more and insure more individuals. But finding meaningful ways to decrease the deficit over the long-term is undoubtedly something to celebrate.

Here’s hoping Congress continues to improve the legislation and pushes through a full repeal and free-market healthcare once and for all.