A new report (pdf) released by the Congressional Budget Office (CBO) on Tuesday indicates that the impact of the Patient Protection and Affordable Care Act (PPACA, Public Law 111-148) on discretionary spending is projected to be larger than initially thought. Discretionary expenditures are those funded through the annual appropriation process. According to the report, which supplements an earlier estimate (pdf) released on March 15, the costs that will be incurred by federal agencies to implement the new policies created by PPACA and to fund a variety of grant and other programs authorized by PPACA for one or more years will likely exceed $115 billion through the year 2019. The CBO did not provide a cost estimate for a third category of discretionary spending, which includes authorizations for grant and other programs for which no specific funding level was identified by the Act.

CBO cost projections are more of an art than science. The CBO acknowledged, for example, that “[b]y their nature . . . all such potential effects on discretionary spending are subject to future appropriation actions, which could result in greater or smaller costs than the sums authorized by the legislation.”

Another recent CBO estimate (pdf) found that the direct spending and revenue effects of PPACA, in conjunction with the Health Care and Education Reconciliation Act of 2010 (otherwise known as the “Reconciliation Act”) would produce a net reduction in federal deficits of $143 billion over the 2010-2019 period as a result of changes in direct spending and revenues.

This entry was written by Ilyse Schuman.

Photo credit:  Andriy Solovyov