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Things to Worry About in the CBO's Score

The top-line numbers are very good for reformers. But there are certain things worth fretting over. The first is an amendment that the committee adopted that would require "the Director of the Office of Management and Budget (OMB) [to] certify annually whether or not the provisions of the legislation are projected to increase the budget deficit in the coming year. If the Director determined that they were projected to increase the deficit ... exchange subsidies would be automatically adjusted to avoid the estimated increase in the deficit for that year."

In the aggregate, the Senate finance bill reduces the deficit. But there are a couple individual years when it increases it. The CBO thus estimates that "the failsafe provisions would require a reduction in exchange subsidies averaging about 15 percent during the years 2015 through 2018." That's a very bad thing, particularly in the first years of the plan. It means that, with no warning, subsidies will be cut by 15 percent, and insurance that families were able to afford the year before will become totally unaffordable. That needs to be changed.

By Ezra Klein  |  October 7, 2009; 5:00 PM ET
Categories:  Health Reform  
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Next: Comparing the Finance Bills

Comments

I'd like to see a CBO score for the Finance bill with the inclusion of a robust public option. I'm betting in that case we'd be getting a much BETTER score with greater affordability. Don't get so caught up with Baucus' bill which the insurance industry loves. We can do much better on affordability and cost saving with a robust public option plan.

Oh, and how about scoring Single Payer like we have been promised forever? Where are the progressive Democrats on this?

Posted by: bgmnt | October 7, 2009 5:13 PM | Report abuse

This CBO score also assumes that the prescribed "waste, fraud, and abuse" reduction of $400 billion from Medicare actually gets legislated and enforced.

Many Americans don't believe that will ever happen.

Posted by: auntmo9990 | October 7, 2009 5:45 PM | Report abuse

Everyone should ask one question! What is in for me and my family?

Will my insurance premium costs go down if so when and by how much?

If the answer is we do not know by now, this health insurance bill is still a pig, just trying to fly. And most importantly, this bill is nothing more than another whopping windfall profit for insurance industry.

Not buying any of that political crap coming from DC, unless and until, they can guarantee all of us that our premium will go down by certain percentage (say 30% 1st year) and they will put cap on raising insurance rates based on CPI rather than current Insurance Inflation Rate which is bank robbery to put it gently.

In the words, tell me how we can we screw insurance companies are included in this bill???

Posted by: kat7 | October 7, 2009 6:12 PM | Report abuse

Nobody cares whether this plan could work in the real world. They just want to get a good "score" and get it passed. This is the biggest sham ever.

Posted by: bmull | October 7, 2009 10:56 PM | Report abuse

The giant stinkers just keep on coming. The problems are far more fundamental than noted above.

People need to understand why this reform bill is highly unsustainable. Large portions of this bill are being "funded" by items that are not credible sources of funds for later years.

For example, about $200b is coming from Medicare cuts to providers...that will work ok for the first few years, but very soon you reach a point where you can't cut Medicare prices paid to hospitals & nursing homes any further without severely crippling them. (Robbing Peter to pay Paul only works for very short periods of time because eventually Peter runs out of money).

Also, material expansion of coverage for the uninsured doesn't start until 2014 in this bill...yet the cuts to Medicare start immediately - so they needed 10 years of Medicare cuts just to pay for 6 years of expanded coverage. I think that's a pretty clear illustration on why this bill is nowhere near a sustainable reform option.

So the question is what happens in later years? How exactly do you keep paying for this massive government program? I think the answer is pretty clearly "we'll worry about that in 6-8 years", which if I recall correctly is exactly how we wound up with such a mess in the Medicare program today.

One more thing we should all consider is that Congress has never been able enact prolonged cuts to healthcare providers (and for good reason since most providers are not being paid enough to cover their costs by the gov't programs). The chances of even that $200b in "funding" materializing over 10 years is slim to none. Hospitals know that Medicare cuts legislated to go into effect in 5 years have no chance of holding up...which is why they're on board here.

If you want a system that pays for care for a few million people for 5-8 years and then collapses upon itself in ruins then this is the way to go. If you want to take more money from the next generation to pay for your healthcare today, then this you bill.

Posted by: HCRsch | October 8, 2009 9:27 AM | Report abuse

Thank you, Ezra Klein, for your intellectual honesty in bringing this fact to our attention.

We await follow-up articles by you on these matters of concern:

(1) Will Congress (as is assumed in the Baucus bill) actually allow the “sustainable growth rate” cuts in Medicare’s physician payments to occur beginning in 2012? History tells us that Congress will block those cuts, making the CBO cost estimates based Baucus’s assumption farcical. According to Michael Cannon, the Baucus bill will come up "at least $200 billion short on the revenue side, making his bill a budget-buster." (Source: Michael Cannon, 10/8)

(2) What about the $11 billion that will be spent to avoid a sharp reduction in payment rates for doctors in Medicare at the end of the year? (Source: Donald Marron, 10/7)

(3) What about the $21 billion that will be spent to make the Medicare drug benefit more generous? (Source: Donald Marron, 10/7)

(4) What about the fact that the Baucus bill omits a $33 billion unfunded mandate on state governments? (Source: Michael Cannon, 10/8)

(5) What about the cost of the private sector mandates in the Baucus bill? "In Massachusetts, those costs accounted for 60 percent of the total cost of reform." (Source: Michael Cannon, 10/8)

Cannon today summarizes these omissions this way:

"That suggests the actual cost of the Baucus bill – $829 billion plus $75 billion plus $33 billion, times 2.5 – is well over $2 trillion.

"Yet the CBO score pretends those costs aren’t even there. It’s like a mystery novel that’s missing the last 50 pages. And the media aren’t even curious.

"In the words of Brad DeLong, why, oh why, can’t we have a better press corps?"

Ezra, it looks like you have some more work cut out for you. It will be a late night.

Like they say in the commercial, we'll keep the light on for you!

Dr. Gregory Garamoni
Doctors on Strike for Freedom in Medicine
http://www.doctorsonstrike.com

Posted by: GLGPHD | October 8, 2009 7:35 PM | Report abuse

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