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New CBO analysis says the Senate bill reduces the deficit. Still.

This won't be shocking to many of you, but the Congressional Budget Office just released an updated analysis for the Senate health-care bill, and it finds that it reduces the deficit, much as its predecessors did. The first 10 years see savings of $118 billion, and the second 10 years see savings in excess of $600 billion. Most striking is that "CBO expects that the legislation would generate a reduction in the federal budgetary commitment to health care during the decade following 2019," which is to say that this bill will cover 30 million people but the cost controls will, within a decade or so, leave us spending less on health care than if we'd done nothing.

That's a pretty good deal.

But it's not a very well-understood deal. In their Wall Street Journal op-ed, pollsters Scott Rasmussen and Doug Schoen observed that "people simply don't trust the official projections. People in Washington may live and die by the pronouncements of the Congressional Budget Office, but 81% of voters say it's likely the plan will end up costing more than projected."

That's obvious enough. People understand the part of the bill that costs money: We're buying health-care insurance for folks who can't afford it themselves. They don't understand the parts of the bill that save money: We're taxing high-value benefits? We've got a Medicare Commission empowered to make unnamed reforms to the system? We're moving toward bundling for hospital payments in Medicare? And since few know about these policies, much less understand them, the projections that show the bill saving money don't make much sense, and so voters don't believe them.

By Ezra Klein  |  March 11, 2010; 12:25 PM ET
Categories:  Health Reform  
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Comments

Ezra,

Why do you continue to promote that the HCR would reduce the deficit?
When you remove the double counting, which you agreed with Rep. Paul Ryan that it was inappropriate ("out of line") for Democrats to claim, there is no reduction to the deficit.

Posted by: cprferry | March 11, 2010 12:33 PM | Report abuse

I think it's simpler than that. Every city, every school district, every church and every family has had a project that went wildly over budget. If you want to make sure you don't overspend, you begin to assume that things will always cost more than the best predictions suggest. It's a semi-rational fatalism, not an effect of which parts of the bill people understand.

Posted by: mattalvarado | March 11, 2010 12:35 PM | Report abuse

I'm curious Ezra.

Does the CBO only estimate the numbers before them, or are they psychologically trained too, to understand that the numbers they are banking on today, might just be different tomorrow.

For example, many belive that families will have incentive to dump their current insurance plans w/premiums, pay the penalty, and then pick up the "guararanteed, no turn downs no matter what shape you're in" coverage only when needed.

Why? Because it will be cheaper on many households only to pay for the coverage when needed, not to pay premiums when you're not using medical service.

So -- do you think the CBO calculated that possibility. Or will they play the "surprised again!" game when people start responding to the financial incentives in the bill, and doing whatever it takes to save themselves money in hard economic times?

Posted by: Mary42 | March 11, 2010 12:41 PM | Report abuse

I want to talk to you about a bridge.

Posted by: onehanded | March 11, 2010 12:42 PM | Report abuse

"people simply don't trust the official projections. People in Washington may live and die by the pronouncements of the Congressional Budget Office, but 81% of voters say it's likely the plan will end up costing more than projected."

You could also draw the conclusion that 81% of voters werent born yesterday, since its patently obvious this will cost exponentially more than projected.

And so be it! This is the health of our fellow citizens we're talking about.

Posted by: zeppelin003 | March 11, 2010 12:42 PM | Report abuse

Also, what are the odds that the Senate bill they are analyzing today will be the same numerical situation after the House "reconciles" it with their own bill.

Surely as the details change, the numbers will be affected too? (ie/no federal monies spent on abortion)

And aren't we, and House Dems, being promised that the Senate bill today is NOT the one that will be left standing, intact? Until we get the actual bill on the table that's being promised after the sidecar reconciliation, the CBO estimates of the current bill are worth only the price of the paper printed on.

Something's smells funny... (can't you smell it where you're at, or have they perfumed the air with fragrances to convince you how sweet it is?)

Posted by: Mary42 | March 11, 2010 12:45 PM | Report abuse

Regarding the "self-executing rule"

*** One provision that may make the rule is a provision that does not allow the House to report the Senate passed Obamacare bill to the President until the Senate passes a reconciliation bill. ***

(Still, there’s no guarantee Pelosi can get to 216 in the first instance. And what happens when the Senate modifies the House’s reconciliation measure?)

Posted by: SisterRosetta | March 11, 2010 12:47 PM | Report abuse

Please re-read Ezra's excellent interview with Rep Ryan, cprferry.

CBO projections say the bill definitely saves money. $118 billion in the first ten years, $600 billion in the next ten.

Rep Ryan had two objections, one fair, one unfair, IMHO:
1) The fair one: You can't "double-count" the savings. That is, while the bill saves money, you can't say it both extends the life of Medicare and reduces the deficit. You can say it does one or the other. But Ryan is critiquing the rhetoric, not the finances: the bill still saves money, and it saves exactly the amount I quoted above That is, the double counting refers to the Democrats making it seem like we had saved ~700 billion in two different places, whereas we only save ~700 billion once.
2)The unfair one: he wants to subtract the cost of the doc fix from the total savings. Why a Republican bill passed a decade ago that is no longer being changed in this bill should be counted as part of HCR I can't fathom.

Posted by: CarlosXL | March 11, 2010 12:47 PM | Report abuse

"We've got a Medicare Commission empowered to make unnamed reforms to the system? "

LOL. First -- do it. Take action. Save the money.

Only then come asking us for a comprehensive bill that you are assuring us all will save us money.

We been burned before by the economists' predictions that don't hold true in reality... (Any chance that those currently without insurance that you're counting on to have their premium dollars pay for others' care might just decide to start treating to get their money's worth themselves?)

When it's free, you see lots of folks demanding coverage, and when we're paying premiums, people generally like to get their money's worth.

Until the government begins to address these problems, the public is rejecting such a massive change with promises to come -- "Get this thing passed and THEN we'll show you what we can do in MC savings..."

Nope -- you go first.

Posted by: Mary42 | March 11, 2010 12:49 PM | Report abuse

We're taxing high-value benefits?

We've got a Medicare Commission empowered to make unnamed reforms to the system?

We're moving toward bundling for hospital payments in Medicare?

Give congress a line-item vote on each one of these and we can get the gain without the pain of providing the federal government with the authority to bankrupt the prviate insurer that my family depends on.....

http://www.nytimes.com/2010/03/09/health/policy/09rates.html?ref=politics

Posted by: FastEddieO007 | March 11, 2010 12:53 PM | Report abuse

Even if we only go back to the end of WWII, there's a whole history of the cost of government going up (or so it's believed). People didn't believe Clinton/Gore would cut the number of fed. employees and actually go into surplus on the budget - with the Greenspawn saying that there was danger that we might pay off the federal debt, dogs forbid.

You can't fight a meme that is well entrenched, especially if the factual record is supportive. That god won't hunt.

This CBO thing is a DC insider thing, totally. Nobody believes it outside the ring around the bathtub.

We need universal health insurance (or health care) because it is the right thing for a civilized people to do. Forget the 'savings'.

The woolly mammoth in the room is provider services that cost too much, but that is the one thing that can't be named (or even looked at) - now that homosexuality is mostly out of the closet. A system based on private sector providers that can charge what they like almost by definition won't bring down costs without attacking that reality. Now, I admit and support fixing the insurance ripoff first, but the real money is elsewhere in costs/charges.

Posted by: JimPortlandOR | March 11, 2010 12:57 PM | Report abuse

I think the public understands perfectly why this bill won't save money. It relies on Congress to do things they have never had the will to do before. AARP will see to it they never touch Medicare and the unions will make sure their health plans aren't taxed. Most of the 'savings' are hand-waving place holders for future legislation that we all know will never happen. It is understood by all that there are huge structural deficiencies in our health care system. However, the Democratic bills (House and Senate) only address the parts that appeal to them without actually forcing a vote on the painful bits. All of this is understood by more people than Washington Post columnists will give them credit for.

Posted by: polijunkie100 | March 11, 2010 1:01 PM | Report abuse

CarlosXL,

How do you reconcile the double counting? You can't count the savings in the bill and not consider the cost of shoring up those accounts.

Now this may be how governments do accounting. And that's fine. However, Ezra can't claim it's wrong then continue to claim a deficit reduction when the double-counting makes up the entire deficit reduction!

Posted by: cprferry | March 11, 2010 1:02 PM | Report abuse

"We've got a Medicare Commission empowered to make unnamed reforms to the system? We're moving toward bundling for hospital payments in Medicare?"

Right. And in case you missed the point that Jim Bunning was trying to make while you were maligning him....there are no circumstances under which Congress will make good on it's promise to cut $500 billion out of Medicare.

Posted by: bgmma50 | March 11, 2010 1:04 PM | Report abuse

Only zombies believe that this bill will actually reduce the deficit.

If only the public would believe everything the Government told them and do what they're told. Their independent thought is so troublesome.

Posted by: fallsmeadjc | March 11, 2010 1:04 PM | Report abuse

I want everyone to standby for the first pronouncement in writing from this Medicare Commission of one of their "unnammed reforms" and watch the sound and fury this causes.

We got a mini dose of this recently with mammograms, it will be similar except multiplied times worse!!

And again, and forever, I point to the Congress' "doc fix" as the penultimate example of the total inability to accept any cost savings to the system on reimbursements.

Posted by: zeppelin003 | March 11, 2010 1:08 PM | Report abuse

"(Any chance that those currently without insurance that you're counting on to have their premium dollars pay for others' care might just decide to start treating to get their money's worth themselves?)" posted by Mary42


You only have to look to Massachusetts to get your answer to that: "Well, the returns are rolling in, and a useful case study comes from the community-based health plan Harvard-Pilgrim. CEO Charlie Baker reports that his company has seen an "astonishing" uptick in people buying coverage for a few months at a time, running up high medical bills, and then dumping the policy after treatment is completed and paid for. Harvard-Pilgrim estimates that between April 2008 and March 2009, about 40% of its new enrollees stayed with it for fewer than five months and on average incurred about $2,400 per person in monthly medical expenses. That's about 600% higher than Harvard-Pilgrim would have otherwise expected."
From http://online.wsj.com/article/SB124726287099225209.html

Posted by: bgmma50 | March 11, 2010 1:09 PM | Report abuse

"We've got a Medicare Commission empowered to make unnamed reforms to the system---and then STEAL that money to pay for other people's benfits (i.e. keeping MEdicare in its status as a debtor).

If you how supporters of this bill are washing their hands of the Medicare insolvency issue as they steal money from the program, this bill looks very fiscally sound to everyone.


This new entitlement will reduce the budget by such and such as Medicare costs eat up that and then some....in the end the totality of congressional's act will bankrupt the USA.


How is that Kool-Aid tasting today Ezra?

Posted by: FastEddieO007 | March 11, 2010 1:09 PM | Report abuse

The bill alone will NOT reduce the deficit.

That would take good governance on the part of the GOP, which itself has created almost all of the national debt so far. (Bush alone doubled the debt in 8 years).

Still, if we don't enact reform, the deficit will go up just as fast as if we had it. This is a damned if you do, damned if you don't. I prefer we try to do something instead of sitting around in apathy and despair while the GOP sabotages gvmt.

Posted by: Lomillialor | March 11, 2010 1:40 PM | Report abuse

The report, released Thursday, also revised its cost savings of the bill, projecting that the budget deficit would be reduced from 132 billion over 10 years to $118 billion.

But the future spending needed to administer parts of the bill could undermine the deficit reduction, including up to $10 billion for the IRS, up to $20 billion for Health and Human Services and up to $50 billion for "grant programs and other provisions."

Don't forget to tell the whole story Ezra....

Posted by: jeffreid1 | March 11, 2010 2:03 PM | Report abuse

"We've got a Medicare Commission empowered to make unnamed reforms to the system?"
------------------------

Give me one example of what this commission will do to lower Medicare costs!? The CBO simply takes a given assumption that it will reduce the current cost increase rate which is 7%-8% and limit it to 4%. It is pure fantasy. The arguement that a $250 billion dollar "doc fix" has nothing to do with this b/c it is 10 years old is ridiculous. It litterally shows you that they will not make cuts.

Posted by: Holla26 | March 11, 2010 2:09 PM | Report abuse

You are amazing. You swing between perceptive, sophisticated analyst and naive twit who just fell off the turnip truck. This post falls into the latter category.

Posted by: ostap666 | March 11, 2010 2:14 PM | Report abuse

The level of hypocrisy in the comments section is astounding.

I heard no complains when the CBO scored Republican bills. I heard no mention of CBO scores when taxes were cut.

You people make me feel a little sick. If you are the ones paying attention to politics, it makes sense that everyone else would be totally confused. If they are getting any of their information from you people, that is.

Posted by: JERiv | March 11, 2010 2:27 PM | Report abuse

I certainly hope they're right.

When it doesn't reach these lofty perches I certainly hope that Ezra will come on here and bash those responsible just as quickly as he does those liable for the Medicare Part D Rx plan. For some reason my expectations on that aren't too high.

Posted by: visionbrkr | March 11, 2010 2:36 PM | Report abuse

Got to love the two sides of the debate:

CBO - According to our continually updated models, using data concerning consumer spending habits and effects of policy ont he budget over the past 50 years, our best estimate is that the bill will lead to moderate deficit reduction in the near term, improving with time.

GOP - We're wearing hats, ergo your argument is invalid. It will cost eleventytrillion dollars, based on stuff I'm just making up.

This is a literal case of people just refusing to believe that any cost reduction can ever happen. The exact effect the bill will have is debatable, but in terms of the federal budget we're almost certainly better off than business as usual.

Posted by: etdean1 | March 11, 2010 3:41 PM | Report abuse

After reading about 15 comments saying the health care reform will cost a lot and save little, etc....

I think it's time to point out the reality, the elephant in the room.

We are spending almost $700 billion/year, right now, already, on defense, even though the cost of fighting the current wars are in the neighborhood of only $100 billion.

That's $600 BILLION/year for defense.

Versus about $150 billion/year for fully implemented health care reform in 2017 or so.

Hmmmm.....

Truth is, most commentators about reform costing too much aren't facing reality.

The elephant in the room is the real problem.

Eisenhower explained this danger.

He would know.

He had far, far more experience than any living person today has.

Click my name and see my blog for an extended quote from President Eisenhower's last address to the nation.

Posted by: HalHorvath | March 11, 2010 4:03 PM | Report abuse

The Eisenhower except is at:

www.findingourdream.blogspot.com

Posted by: HalHorvath | March 11, 2010 4:06 PM | Report abuse

I think it is much more honest for Republicans to say that they don't trust CBO projections than the distortions and misreadings that they've been doing in the past; trying to claim that the CBO isn't saying what the CBO is saying.

So kudos to them for switching to a more honest, if misguided argument.

Posted by: zosima | March 11, 2010 4:14 PM | Report abuse

Why are we giving people prepaid care instead of buying them insurance.

Posted by: staticvars | March 11, 2010 4:23 PM | Report abuse

Obama and his comrades are using deception, gimmicks, creative accounting, smoke and mirrors to hide the trillions of dollars their scam will cost us.

"Legislative Reality vs, Political Reality," by Peter Suderman, identifies specific deceptive strategies. One of the strategies entails shifting expensive parts of a bill to completely DIFFERENT pieces of legislation. So the costs found by the CBO will be only PART of the costs.

In the House, Democrats shifted an expensive, unpaid-for "fix" to doctor's Medicare reimbursement rates over to a separate bill. And in the Senate, they backloaded the spending so that its full effects would not be felt in the 10-year window that CBO scores. In the latest Senate bill, 99 percent of the spending would occur in the last six years of the budget window.

http://reason.com/archives/2009/12/10/legislative-reality-vs-politic

Obamacare will dramatically increase taxes, costs and the deficit while rationing and destroying health care.

Posted by: AntonioSosa | March 11, 2010 5:14 PM | Report abuse

Just so that someone corrects the kinds of assertions listed above that are periodically made:

1) The delayed start time for spending is also a delayed start to revenues. What the delay does is reduce the appearance of the 10 year cost of the bill. If the bill were to go into effect earlier, the total cost would be proportionally higher, but so would the deficit reduction.

2) Again, the doc fix has as much to do with HCR as funding for Afghanistan. Even if the HCR bill is rejected and never becomes law, the doc fix will still have to be passed.

It's sad that even on a health care policy blog so many commenters base their arguments on ridiculous disproven myths instead of actual flaws in the legislation.

Posted by: etdean1 | March 11, 2010 5:29 PM | Report abuse

Where were all the people on this comments page as the Republicans were passing the Medicare Part D benefit - a new entitlement that was TOTALLY unfunded? Here's a reminder, from Forbes (that liberal rag), of the fight here:

http://www.forbes.com/2009/11/19/republican-budget-hypocrisy-health-care-opinions-columnists-bruce-bartlett.html

I love the fact that Richard Foster, Medicare's chief actuary projected the benefit would cost $534 billion over the next decade. But his job was threatened - by R's - if he dared say so before the vote.

Republicans added Medicare Part D - completely unfunded - to our deficit. And now they're crying over this bill, which would *at least* pay for part, if not all, of itself.

Gimme a break.

Posted by: WonkRN | March 11, 2010 6:03 PM | Report abuse

@WonkRN:

Totally agree.

This is the reason these folks (TEAs / Repubs) yell at others, rather than having an actual conversation with others. They don't like it when other point out the fallacies in their deluded minds.

Rather than concede that they're wrong (or clinically insane), they'd rather just try to silence you by talking louder than you.

Sad.

Then there are the folks who don't care about anything other than cutting taxes. They couldn't care less about the deficit. All they care about is getting more money in their paycheck.

Those folks just latch into anything that won't cut or reduce taxes and try to get rid of it in any way possible. They won't be happy until there is no tax, and the government is run by one guy (pro-bono), or their accountant.

Those aren't sad. They are reprehensible. And considering their ultimate goal is to "starve" the US Government (aka Reaganites), they are against the US Government.

Hmm... Wouldn't that, by extension, make them anti-American?

Posted by: JERiv | March 11, 2010 8:41 PM | Report abuse

"2) Again, the doc fix has as much to do with HCR as funding for Afghanistan. Even if the HCR bill is rejected and never becomes law, the doc fix will still have to be passed.
Posted by: etdean1"

Etdean1,

How do you get to count savings from Medicare but not its related expenses?
How do you get to double count Medicare premiums without accounting for the replacement of those funds?
How do you get to count biofuel tax credits?

The only reason the HCR bills are under a $100 trillion and supposedly reduce the deficit are the deceit and lies of those writing the bills, stripping of its related expenses and keeping its unrelated revenues and savings.

Posted by: cprferry | March 11, 2010 10:13 PM | Report abuse

We had the wrong people working on healthcare reform. We cannot possibly expect government to effectively and efficiently manage healthcare, either.
Look at Medicare. Look at Medicaid.
What more proof do we need ???????

Posted by: ohioan | March 11, 2010 11:27 PM | Report abuse

Sorry, 1, not 100, trillion.

Posted by: cprferry | March 12, 2010 9:51 PM | Report abuse

Perhaps the CBOs estimation of the cost of the Iraq War, or Massachusetts health care problems, or the nationwide budget crisis that exists at all level that causes the public to not trust government estimates of costs and revenues.

Oh, and Ezra, taxation is not savings.

Posted by: BradPotts | March 18, 2010 2:43 PM | Report abuse

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