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Size matters


Harold Pollack does the math:

By 2019 when the reforms are fully implemented, the Senate bill would provide about $196 billion per year down the income scale in subsidies to low-income and working Americans.

Even policy wonks have trouble getting their heads around such a big number. With due allowance for the back-of-the-envelope nature of this calculation, $196 billion exceeds the combined total of federal spending on Food Stamps and other nutrition assistance programs, the Earned Income Tax Credit, Head Start, TANF cash payments to single mothers and their children, all the National Institutes of Health, and the Department of Housing and Urban Development. (I admit to some uncertainty about that last one. We may have to leave HUD behind…)

Some progressives have decided that they cannot support this imperfect bill. We have 196 billion reasons to disagree.

Gawker had the best take on this, headlining the post, "News of First Major Progressive Legislation in 30 Years Enrages Liberals." And make no mistake, this legislation is major, and as Pollack points out, quite a bit more so than people realize.

To avoid the psychologically scary $1 trillion price tag, the bill doesn't kick into action until 2014, the fifth year of the 10-year budget window. If the bill's price were actually being measured over 10 years, it would be well over a trillion (and still paid for, to be sure, just as the bill grows in the second 10 years, but continues cutting the deficit). In 2013, for instance, the subsidies are ... no dollars. In 2019, they're almost $200 billion. And because they grow each year alongside health costs, it's a safe bet they're above $2 trillion from 2020 to 2029.

That's why so many of the folks who focus on the subsidies are so scared of seeing this opportunity slip away. Democrats haven't been close to getting anything even comparable to this in decades, and there's no reason to think they'll have another chance anytime soon. I mean, we're about to pass a $900 billion bill to help low-income Americans afford health-care coverage, and that's wildly low-balling the true size of the subsidies!

By Ezra Klein  |  December 22, 2009; 10:42 AM ET
Categories:  Charts and Graphs , Health Reform  
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But then are you aware that when you talk figures like $2 Trillion from 2020 to 2029; you are open for criticism from Robert Samuelson and Megan McArdlee of the world that indeed this bill is nothing but big entitlement expansion with uncertain cost controls?

Look at these figures and then it is pretty obvious why people need to be obsessive with proposed 'cost control measures'. If those are weak, quite possibly so and definitely high possibility of diluting further in Conference when a weaker House bill meets the Senate version; Congress will have to come back again and again to plug these holes.

Yes, agreed Medicare and Social Security both were done like this over the years; but why do we need to start from such a weaker base of cost controls? I suppose we are not talking here 'employment guarantee' for Congress folks; they have created enough other problems so that they will be busy for long time to come.

Posted by: umesh409 | December 22, 2009 11:12 AM | Report abuse

Raise your hand if you care what Samuelson or McArdle think.

Posted by: Chris_O | December 22, 2009 11:27 AM | Report abuse

something I'm clueless about: how will the subsidies grow over the second decade? I assumed the tax on "Cadillac plans" was going to bring in less revenue over the long term, as it became more effective at reigning in employers' profligate use of generous plans, and boosting wages instead. Will those wage boosts be producing more revenue specifically for the subsidies? only through a small payroll tax increase, right?
And the savings from waste in Medicare and useless plans in Medicare Advantage--isn't that more or less a one-time savings? If you get $400 billion over ten years, where do you get more savings when you've succeeded at eliminating the waste?

Posted by: andrewlong | December 22, 2009 11:42 AM | Report abuse

So in the second decade of reform there will be $1 trillion dollars of Medicare cuts and $1 trillion dollars of taxes on employees and employee health benefits.

Posted by: jimjenson | December 22, 2009 1:55 PM | Report abuse

Shhhh. Lieberman will read this and change his mind.

Posted by: glen5 | December 22, 2009 3:17 PM | Report abuse

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