He cites long-term CBO projections that the primacy deficit (which excludes interest payments) will bottom out at 2.6% of GDP in 2018 and then rise to 7.4% by 2040.  The entire increase will come from rising healthcare costs. Notes Blinder:

We have a huge problem of exploding health-care costs, part of which show up in Medicare and Medicaid spending.

Other “deficit myths,” Binder argues, include the notions that Americans are demanding deficit reduction like never before (they’re not, he says) and that the deficit problem is so acute it requires immediate spending cute despite the bad economy (it isn’t, he says).

1. 2.7 million Medicare recipients saved more than $1.5 billion on prescriptions because of discounts mandated by ObamaCare in the donut hole.

2. Through November, 24 million people Medicare recipients have received free preventive care, which is mandated by ObamaCare.

Commercial
Members 171 million
Expenditures: $850 billion

Medicaid and Related Programs
Members: 60 million
Expenditures: $440 billion

Medicare:
Members: 48 Million
Expenditures: $575 billion

Approximately 8.3 jobs are created by every $1 million in military spending….A million dollars of spending would create 15.5 jobs in public education, 14.3 jobs in healthcare, 12 jobs in home weatherization, or about the same number of jobs in various renewable energy technologies.   A million dollars spent on construction (residential and non-residential structures) creates 11.1 direct and indirect jobs….

The (at least) $1.3 trillion of Department of Defense war spending in the past decade averages out to $130 billion per year.  While these funds did indeed create jobs in the military and in related sectors….$130 billion per year could have created a net increase of jobs in other sectors:  for example, more than 300,000 jobs in construction, or 900,000 jobs in education or about 780,000 jobs in healthcare.

Some 8 million federal employees are covered by OPM under the Federal Employees Health Benefits Program at a cost of $43 billion, and the good news here is that rate hikes in the federal program tend to be an indicator of price increases in the commercial market.  As previously reported, a recent Mercer employer survey suggests premiums for 2012 will rise about 5.4%.  However, Mercer notes, without benefit buydowns and cost shifting, the increase would be more like 7% in 2012.

The question is why the big spike?  KFF gave no clear answer.  However, KFF chief executive Drew Altman was clear healthcare reform wasn’t the culprit: “Regardless of how you feel about the Affordable Care Act, its effect on premiums this year is modest.  Most of the law’s provisions don’t go into effect until 2014.”  The two biggest mandates taking effect in 2011 — allowing children up to age 26 to stay on their parents’ policies and coverage of certain preventive procedures — account for about 100 to 200 basis points of the 2011 increase, Alman says.

Others aren’t so sure.  Deutsche Bank’s January employer survey found the exact same 9% increase for 2011; however, employers said that healthcare reform accounted for up to 700 basis points of the increase.  “Insurer and employer concerns around the incremental costs of new mandates and taxes….was by far the primary driver of the spike in premium increases for 2011,” says Deutsche Bank analysts Scott Fidel. 

Still other analysts put the cost of reform at around 300 to 400 bps — which I’m guessing is probably closer to the truth given that underlying cost trends seem to be hovering the in 5% to 6% range.  

1. Employers continue to shift costs to employees or reduce benefits.  Excluding these types of plan changes, costs would rise about 7.1% in 2012.  In other words, employers expect to shift about two percentage points of underlying cost increases to employees next year.  In the past few years, the cost shift had been more like three percentage points — largely because underlying costs had been rising at a faster pace (9% annually over the past five years).   “If the underlying trend is lower to begin with, employers will be likely to shift less cost,” Mercer says.

2. Use of healthcare services is slowing, which may be a result of a bad economy combined with higher deductibles and other forms of cost sharing, Mercer says.  In other words, people can’t afford to spend as much on care so they go without.  Another possibility, Mercer says, is health improvement programs are keeping people out of the emergency room and consumers “are more aware that overuse and misuse of health care services will directly impact their wallets as well as their employer’s budget.” 

Average annual growth in national health spending is expected to be 0.1 percentage point higher (5.8 percent) under current law compared to projected average growth prior to the passage of the Affordable Care Act (5.7 percent) for 2010 through 2020. Simultaneously, by 2020, nearly thirty million Americans are expected to gain health insurance coverage as a result of the Affordable Care Act.