Why Henry Waxman Should Sacrifice a Goat to the Congressional Budget Office
If we've learned anything from the last few months, it's that we are all, on some level, slaves to the Congressional Budget Office. I thought I was pretty familiar with my analyst overlords. But Jon Walker has connected a few dots I'd forgotten about. The issue, as it is so often is these days, is the public plan.
Back in May, the Congressional Budget Office released a paper explaining it thinking on scoring health reform. "If a public plan dominated an exchange-based market," the office said, "then that component of the health insurance system would, in practice, be largely governmental. In that case, all of the transactions of the exchange should properly be considered part of the budget."
This is a huge deal. Imagine that the House passes its version of a public plan with Medicare bargaining rates. Imagine that this version of the public plan will actually save $200 billion over 10 years (this number, just to be clear, is hypothetical). But imagine that those savings mean the public plan will become the de facto choice. This is the favored vision for many liberals.
At least, it is until they get the CBO report back. If the CBO estimates that the public plan will collect, say, $2 trillion in premiums over that period (which would replace the $2.2 trillion private insurers would have collected), then health reform will suddenly cost $2 trillion more. All that will be paid for. The total result, in fact, will be to save money. But the sticker shock will be immense. And it could wipe out any rhetorical advantage liberals would have derived from the $200 billion in savings. The House will be saddled with a bill that appears to cost $3 trillion. The Senate will have a bill that appears to cost $1 trillion. The actual difference will be that the House bill saves Americans $200 billion. In an analytically honest political environment, the House bill would clearly be preferable. But we don't live in an analytically honest world. Walker concludes:
In the end, I think the CBO scoring will be the biggest single event in the whole reform debate. If the CBO says a specific public plan will reduce the cost of reform by hundreds of billions, I think it becomes politically unstoppable. If a public option is declared a massive expansion of government or found to do little to control cost, it will be in serious jeopardy.
He's probably right.
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