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Notes on CBO skepticism

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My colleague Neil Irwin has a very good piece on the difficulty the Congressional Budget Office has predicting the cost of something complex like the health-care reform bill. But because his piece is coming in the context of a coordinated conservative effort to discredit the CBO's analysis of the health-care reform bill, it's worth making a couple of points.

First, be very careful with any criticism of CBO that seems to be merited by a particular score rather than a particular methodological difficulty. To put that slightly differently, does anyone think that conservatives would be squawking if CBO had disappointed Democrats by saying the bill would save less money than either the House or Senate incarnations? If not, then keep in mind that this is a political, not technical, dispute. To establish my own credentials on this, here's the post I wrote defending the CBO when liberals were arguing that it was underestimating health-care reform's savings.

Second, don't confuse uncertainty with bias. It's true that the CBO's estimates of the health-care reform bill are uncertain. But that cuts both ways. A lot of very respected health-care economists and experts think the CBO is being way too conservative in how much the bill's payment reforms will save. Historically, CBO has frequently underestimated the savings from health-care reform legislation. To use one example, they heavily overestimated the cost of the Medicare Prescription Drug Benefit. More examples here.

Third, some argue that the problem with CBO's estimates is that they can't control for Congress. The actual evidence shows that Congress is much better at sticking to tough cost controls than people give them credit for. But beyond that, if Congress can't do hard things, then everyone is screwed. Conservatives, who strongly believe in entitlement reform, are perhaps in the worst shape as that's the hardest thing to do. Moreover, the health-care bill has the Medicare Commission, which explicitly makes it easier to do hard things because it takes some of the power away from Congress and gives it to independent experts. If you think Congress is the problem here, then this bill is the best answer anyone has yet come up with.

Fourth, some conservatives are arguing that Democrats "gamed" the CBO in order to get the score they wanted. That's only true insofar as you think going to office hours and working with the teacher is the same as cheating on a test. Both parties go back-and-forth with CBO to try and get their legislation down to a price tag they're comfortable with. But it's not some sort of trick. In this case, Democrats changed their legislation so the subsidies grew more slowly over time and the excise tax would grow faster. In other words, CBO said that they'd need to do hard things their constituents wouldn't like if they wanted to cut the deficit more, and they did them. That's not gaming, it's governing.

The role of CBO isn't to offer perfect estimates. Predictions are hard. Its role is to offer the best guess anyone can reasonably offer. The most common criticism of the agency is not that it is too generous to untested legislation, but too conservative. That's a byproduct of needing evidence to build models but also needing to evaluate policies that have never really been tried before. But it's okay. We probably want our scorekeeper to be a bit on the conservative side.

What we can say about the CBO score the Democrats got is that it could be overestimating or underestimating the savings that health-care reform will deliver, but in any case, this is the best guess from the town's most rigorous guesser. And it's a more promising prediction than was offered for the Medicare Prescription Drug Benefit or the Bush tax cuts or really any piece of legislation passed in the last 10 years. Democrats have done the best they can to make this bill fiscally responsible, and CBO has done the best it could to make that a tough test to pass. Dismissing that works for the GOP's short-term agenda, but that shouldn't be confused with a serious methodological critique that they mean to sustain.

Photo credit: Alex Wong/Getty Images.

By Ezra Klein  |  March 19, 2010; 2:32 PM ET
Categories:  Budget , Health Reform  
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Comments

"What we can say about the CBO score the Democrats got is that it could be overestimating or underestimating the savings that health-care reform will deliver"


Ezra,

its not even just that. We're creating another "doc fix" type mess with the excise tax. Everyone from liberals to conservatives to Republicans to Democrats admit that by shoving it to 2018 means that they will NEVER pull the trigger on it especially when it will end up hitting such a large number of families that will still be struggling at that point. Sorry this is as shoddy a job as the Republicans did with the Rx drug plan.


the excise tax could have either kept costs strongly in line or brought in $145+ BILLION in revenues. Now it will do neither due to the sell-out to unions. Now I'm just wondering who's deeper into Dems pockets unions or lawyers?

See Katie Pickett for some truth.

http://www.time.com/time/politics/article/0,8599,1973480,00.html

Posted by: visionbrkr | March 19, 2010 2:39 PM | Report abuse

"Moreover, the health-care bill has the Medicare Commission, which explicitly makes it easier to do hard things because it takes some of the power away from Congress and gives it to independent experts. If you think Congress is the problem here, then this bill is the best answer anyone has yet come up with."

-------------------------------------------

As I read it - the Medicare Commission's primary job is to reduce the growth of Medicare from its current pace of 7-8% to 4%. The CBO has this built in to its estimates. They have no idea how they are going to do this other than to say things like "We will hire experts to find cost savings." OK - what does that mean? The Commision will be the one that says "take the pain pill and don't get the surgery." So the real questioning of the CBO's score is the assumptions not the score.

Posted by: Holla26 | March 19, 2010 2:51 PM | Report abuse

"Everyone from liberals to conservatives to Republicans to Democrats admit that by shoving it to 2018 means that they will NEVER pull the trigger."

This is not true. I think the tax is more likely than not to take effect. For one thing, you'd need 60 votes to stop it.

Posted by: Ezra Klein | March 19, 2010 2:51 PM | Report abuse

"Fourth, some conservatives are arguing that Democrats 'gamed' the CBO in order to get the score they wanted."

I think the accusation of gaming comes with the assumption that many of the adjustments being made to the bill in order to improve the score will not be implemented, or will be revised down the road, without much emphasis on how that would effect the CBO scoring.

Too conservative or not, it's very difficult to predict what's going to happen with such complicated legislation.

Posted by: Kevin_Willis | March 19, 2010 2:54 PM | Report abuse

Madoff seems like an amateur compared with Obama and his comrades, who seem to have actually convinced some people that they can provide insurance for millions more people without increasing the already record-breaking federal deficit!

Posted by: AntonioSosa | March 19, 2010 2:55 PM | Report abuse

Thank you. It's nice to hear someone with a rational and open mind putting into words what many of us know, but have difficulty trying to get across to other who are more ideologically inclined and close-minded.

Posted by: JERiv | March 19, 2010 2:59 PM | Report abuse

The problem is NOT the CBO, but Obama and his comrades, who provided the CBO with smoke and mirrors for the CBO to calculate costs. Garbage in, garbage out. Or smoke and mirrors in, smoke and mirrors out.

Obama and his comrades are using deception, gimmicks, creative accounting, smoke and mirrors to hide the trillions of dollars their scam will cost us. What they are giving the CBO to consider is only PART of the scam, while the most expensive parts of the scam are hidden under other bills or passed to the states (which we will still have to pay).

"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, destroying businesses and jobs, and destroying our economy and our freedoms.

As the Obama campaign was funded largely by U.S. enemies like George Soros, it seems Obama and his comrades are trying to repay them by destroying our country!

Posted by: AntonioSosa | March 19, 2010 2:59 PM | Report abuse

The problem with the CBO figures is that they based it on what the assumptions would be on current legislations with no changes happening. We all know that those in Congress and the Presidency have the tendency to change things in response to electoral result by making promises they can't keep.

Posted by: beeker25 | March 19, 2010 3:01 PM | Report abuse

Ezra,

I hope you're right though I find it hard to trust spineless politicians who can run on "we're saving you from taxes" all while costing them much more in the long run.

Don't they need 60 to pass the doc fix too once HCR passes? Maybe we can use that as a barometer of future fiscal conservatism.

Posted by: visionbrkr | March 19, 2010 3:04 PM | Report abuse

Oh, do we have a new Freeper today? Welcome AntonioSosa, I look forward to skipping over your posts...

Posted by: JkR- | March 19, 2010 3:13 PM | Report abuse

AntonioSosa - Two things 1) Take your medication 2) adjust your tinfoil hat.

Posted by: nisleib | March 19, 2010 3:13 PM | Report abuse

From the CBO analysis of the Senate bill:

===
Based on the extrapolation described above, CBO expects that Medicare spending under
the bill would increase at an average annual rate of roughly 6 percent during the next two
decades—well below the roughly 8 percent annual growth rate of the past two decades
(excluding the effect of establishing the Medicare prescription drug benefit). Adjusting
for inflation, Medicare spending per beneficiary under the bill would increase at an
average annual rate of roughly 2 percent during the next two decades—much less than
the roughly 4 percent annual growth rate of the past two decades. Whether such a
reduction in the growth rate could be achieved through greater efficiencies in the delivery
of health care or would reduce access to care or diminish the quality of care is unclear.
===

In other words, the politicians told us to assume a low growth rate so we did ... we have know idea if it will be achieved.


This is similar to the Ryan Roadmap when he said that the CBO should "assume" that tax rates will be at 19% of GDP, even though he cut or eliminated every tax on the books.

Posted by: cautious | March 19, 2010 3:14 PM | Report abuse

Here's a question:

Republicans complain about the mandate to have the 31 million uninsured Americans buy insurance from PRIVATE sector insurance companies. they complain this will be a "boon to the insurance companies." When asked what they would rather see, the consistently state they want "Americans to be able to buy insurance" (presumably from the same PRIVATE sector insurance companies) "across state lines." Which isn't a "boon to the insurance companies?"

And if Americans are buying insurance from PRIVATE sector insurance companies, where's the government takeover, government-run health care?

Posted by: jade_7243 | March 19, 2010 3:17 PM | Report abuse

Re: CBO skepticism: Last night, I watched your (most recent?) stint on Charlie Rose with Lawrence O'Donnell, Ornstein, and Lowry and was very surprised to hear O'Donnell say that CBO tends to "lean" toward the majority, i.e., tries to give their analysis a "positive spin" for the majority. I actually thought, and think you agree (?), that CBO strives to be unbiased.

BTW: I had lots of problems with O'Donnell's presentation throughout the show (did you?). I felt he: monopolized the convo, acted like he was the "insider expert", etc., but his info seemed dated (I don't necessarily think Congress functions like it did when he was there), and just plain wrong. Sorry, I digress ... and vent. I wanted to hear more from you and Ornstein but O'Donnell got in the way.

Posted by: onewing1 | March 19, 2010 3:18 PM | Report abuse

Someone should do a chart of Ezra's feelings about the CBO. Whenever he doesn't like the numbers, he goes on about why you shouldn't trust the CBO. Now, of course, when he likes the numbers, he goes on about why you shouldn't trust the people who attack it.

Posted by: tomtildrum | March 19, 2010 3:22 PM | Report abuse

Per Jonathan Cohn, "Remember, when the CBO makes a projection for how much a program will cost over time, it isn't just spitting out a single number. It's giving a range of numbers. It's typically the midpoint that you hear about, but there's always a chance that the number will be higher or lower, by a certain interval. And, in order to play it safe, CBO decided it would judge health care reform based on the worst possible estimate within that interval."

http://www.tnr.com/blog/the-treatment/what-fiscal-responsibility-looks

Posted by: nisleib | March 19, 2010 3:24 PM | Report abuse

geez... what trash from a 'baby'.

Ezra... if the CBO is so good, why are we in so much Financial trouble TODAY?

Add this huge ideological self-indulgence to today fiscal status... Ezra, junior, don't plan on retiring - you are going to have to work until you die in order to pay for today's squandering of your future.

Sorry about that... but you voted for it.

Posted by: wilsan | March 19, 2010 3:38 PM | Report abuse

jade7243,

technically 15 million (about half) will be on Medicaid. Not necessarily a "takeover" but technically that's a government program just so that you're factually correct.

I also feel that some conservatives will feel that even if this passes (as it should) that their efforts have staved off a government takeover. You do know that there are some crazies out there that want single payer, Medicare for all.

Anyone that's sensible will understand this isn't a takeover. Is it a standardization of benefits/coverage to get certain economies of scale, sure it is. Is that a takeover, no.

Posted by: visionbrkr | March 19, 2010 3:43 PM | Report abuse

The CBO "scores" the assumptions they are given: half trillion in cuts to Medicare (except Florida); 21% reduction in Medicare pmt rates to MD's, etc; double counting of CLASS premiums; future congress will implement cadillac tax when this CONgress won't...
Reading the CBO score of the Manager's Amendment (40 pp long) provides great insight into the CBO's ACTUAL view of the bill: "It is unclear whether such a reduction in the growth rate (referring to Medicare spending) COULD BE ACHIEVED, and if so, whether it would be accomplished through greater efficiencies in the delivery of health care or WOULD REDUCE ACCESS TO CARE OR DIMINISH THE QUALITY OF CARE. That, WaPo, is what the CBO see's this steamy pile to be.

Posted by: JohnLeeHooker1 | March 19, 2010 3:51 PM | Report abuse

3 Points need to be made regarding this post:

1. ) I admire the responsibility by which Ezra regards his own credibility. This is admirable.

2. ) When our legislators are faced with the uncertainty in cost of legislation, especially re-curring cost and/or structural deficits, which side of uncertainty should the err? What would it mean for this country if the CBO is dramatically wrong on its very uncertain projects on the effects of healthcare cost growth? If healthcare starts costing more than it does today, what would be the ramifications of this legislation?

3. ) What can we conclude based on real world models of how this type of gov't push toward insuring all in the most similiar trial case---the isolated experiemnt of RomneyCare in Massachussets...if what happened there happened nation-wide, will people healthcare coverage/costs improve? Or dramatically worsen?

Posted by: FastEddieO007 | March 19, 2010 4:11 PM | Report abuse

Good defense. Question is why are not Dems picking up this in rebutting GOP attacks? Again Dem 'shouting machine' is way too weak.

You are absolutely right (which is what I was also thinking) if the same CBO would have given bad score, these GOP guys will be attacking relentless too.

Really some one needs to call the bluff of these guys. Did Obama speak about that in his Friday stump speech?

Posted by: umesh409 | March 19, 2010 4:19 PM | Report abuse

If everyone is eventually purchasing healthcare in the exchanges there will be more competition among insurers, more insurance regulation, and will be a big step toward the bipartisan Wyden Bennett plan which also required everyone to purchase insurance in exchanges and compensation for those who couldn't afford it. I trust Ezra more on all of this than anonymous bloggers.

Posted by: Mollie2 | March 19, 2010 4:37 PM | Report abuse

"In this case, Democrats changed their legislation so the subsidies grew more slowly over time and the excise tax would grow faster. In other words, CBO said that they'd need to do hard things their constituents wouldn't like if they wanted to cut the deficit more, and they did them."


No Ezra, they didn't have to do things their constituents wouldn't like. They could have included a public option to cut the deficit problem. But, hey, that wouldn't be practical.

Posted by: PEHodges | March 19, 2010 5:04 PM | Report abuse

First, Ezra, its unclear to me why someone let's you publish anything. Your lack of understanding of economics or the CBO process obviously does not give you any pause before you type out another poorly thought out, but well written by the way, article.

The administration and Democrat leadership has clearly shown it will do anything it can to ignore the will of the people and to use any means they can to get this monstrosity passed. The reconciliation, deem and pass, and flagrant use of bribery and arm-breaking makes this obvious to the voters. It should, therefore, be an easy leap to understanding that they will give the CBO completely erroneous parameters that they know in advance will give them the numbers they wanted to show.

There should be some intellectual and knowledge-based standards for Congressmen and for writers. Then, we would not have to deal with ignorant children trying to influence grownups or jamming such bad legislation through the system.

This bill could pass and if it does, we will see the disastrous results in the near term both economically and politically.


Posted by: gmonsen | March 19, 2010 5:06 PM | Report abuse

Ok let’s cut through the bull…

The entire “deficit” savings in this bill is driven by cuts to our seniors’ Medicare program.

Therefore by default any Representative or Senator who argues they are voting for the bill because it reduces the deficit is either saying they support spending less on senior citizens’ health care or they are flat out lying to you.

Reductions to Medicare are the only semi-tangible cost savings in this bill, so when these same elected officials come back later to pass the infamous “doc fix” resolution; or they vote to restore the cuts they made to Medicare; they will be clearly stating that they LIED to the American people. Perhaps THIS is what Joe Wilson was referring to in the State of the Union?

Posted by: ELFopportunity | March 19, 2010 5:26 PM | Report abuse

The Cornhusker Kickback, Gator-aid, the Louisiana Purchase, Union-caid; then add to that lucrative jobs to Democrats who vote for the health care takeover and are defeated in November.

With deals such as this, how can Democrats argue with any shred of dignity that the federal government can manage health care more efficiently than a vibrant competitive market place? If insurance executives made deals like this they would be in federal prison!

If remains to be seen if we hold our elected officials to the same (minimum) standards. 2011 may bring congressional hearings by a Republican Congress, and prosecution in the courts, for back-alley deals cut in this negotiation!

Posted by: ELFopportunity | March 19, 2010 5:38 PM | Report abuse

@ gmonsen:

" ... it will do anything it can to ignore the will of the people ...

I would really appreciate it if, when you're speaking for "the" people, you would qualify which "people" you are referring to. Example: the people that you represent, some of the people, Republicans, Conservatives, Tea Partiers, the people I hang out with, etc.

I ask this, because I am one of "the" people and you do not speak for me, nor do you represent what I (or millions of others) think.

Thanks in advance for your cooperation.

Posted by: onewing1 | March 19, 2010 5:43 PM | Report abuse

It's easy to respond to Mr. Klein: when in doubt about the future, be conservative in your estimates.

Posted by: fabio9000d | March 19, 2010 5:58 PM | Report abuse

The fact that the Democrats reverse-engineered their signatue domestic policy initiative to get the right CBO score is indeed a source of conservative complaints about "gaming" the CBO.

But it's also an exceedingly minor complaint in a sea of major ones — like the Medicare double-counting (which Klein himself called "out of line"); the front-loaded taxes and back-loaded benefits that push most of the cost out of the ten-year budget window; the misappropriation of "revenue" from Social Security and long-term care premiums; borrowed (and dubious) "savings" from the student loan takeover bill, on and on.

Is all that governing, too?

Posted by: ironchefofmunchies | March 19, 2010 6:03 PM | Report abuse

"This is not true. I think the tax is more likely than not to take effect. For one thing, you'd need 60 votes to stop it>'

Firstly, why would it require sixty votes to stop? Are you suggesting someone is going to filibuster the revocation of a highly unpopular tax?
Secondly, the notion that the Democrats didn't game the CBO is absolutely ridiculous. We have heard for a year that health care reform is the single most urgent issue this country faces. If that is the case, why is the vast majority of the "reform" not occurring for four years? 98% of the spending in this bill occurs over a six year period, yet the Democrats would have us believe that the bill only costs $940 billion for ten years. That may be technically true, but that is only because, for all intents and purposes, that ten years is really only six years.

Posted by: Bob65 | March 19, 2010 6:32 PM | Report abuse

What SAVINGS is this guy talking about? As in "The more you spend, the more you save"?

Posted by: NoWeWillNot | March 19, 2010 6:41 PM | Report abuse

You ignore what Congress did in 2009 regarding its response to the warning issued by the Medicare trustees.

HR 5 of the 111th Congress “Turned Off” the Medicare Trigger in the 111th Congress: The “Medicare Trigger” would merely cause the House to consider options for reforming Medicare spending, rather than take appropriate remedial action. CBO projected at that time that the Medicare program would grow from $454 billion in 2008 to $889 billion in 2018, an increase of $435 billion or 96%.

Here is the text from HR5:

Sec. 3(e) - (e) Medicare Cost Containment- Section 803 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 shall not apply during the One Hundred Eleventh Congress.

"Shall not apply"???

This is what people legitimately fear about Congress. They write laws, setup independent Medicare trustees - then Congress simply walks away from sound fiscal advice that they don't want to hear.

The saddest part about this episode (in addition to Congress's shameful lack of action to the Trustee's warning) is that such action was barely even mentioned in the press. And I am sorry to point out that this article continues the trend.

Posted by: jkf50 | March 19, 2010 6:59 PM | Report abuse

BS Does this writer, and I use the term loosely, actually believe what he just wrote?

What entitlement ever reduces the deficit?

Mr Klein can continue to stick his head in the sand, but any thinking American knows Obamacare will bankrupt America. CBO or no CBO.

Posted by: devildogdon | March 19, 2010 7:01 PM | Report abuse

Shake those pom-poms, Ezra! You are the Dems' cheerleader, par excellence. Look forward to your posts in years to come as healthcare becomes the monstrosity already outlined in this lousy legislation.

Posted by: jkilmer | March 19, 2010 7:22 PM | Report abuse

Ezra should have a business card printed:

Ezra Klein

Democratic Shill


Posted by: sshamba | March 19, 2010 8:02 PM | Report abuse

You chose to swallow a gnat while ignoring
Pterodactyls like Medicare double-counting (didn't you call that "out of line"?); front-loaded taxes and back-loaded benefits that push most of the cost past CBO's 10-year window; misappropriation of "revenue" from Social Security and long-term care premiums; borrowed and unlikely "savings" from the student loan takeover bill.

Posted by: MaryMc1 | March 19, 2010 8:20 PM | Report abuse

http://www.cbo.gov/ftpdocs/113xx/doc11376/RyanLtrhr4872.pdf

This bill will explode the deficit. Just ask the CBO.

Posted by: chris_bunce | March 19, 2010 8:36 PM | Report abuse

I just want to say I like this illustration.

Posted by: NicholasBeaudrot | March 19, 2010 8:36 PM | Report abuse

Thank you. It's nice to hear someone with a rational and open mind putting into words what many of us know, but have difficulty trying to get across to other who are more ideologically inclined and close-minded.

---

Ha, you're kidding, right? Ezra Klein has been singing the same tune month, after month, after month. The fact of the matter is, the proposed legislation may pay for itself and it may even save some money in the second decade. But THAT is not the same as bending this downward:

http://www.cbo.gov/publications/collections/health.cfm

in the years ahead, the original goal of health care reform if you listened to Obama during the campaign and early in his first year. A cool trillion saved in the second decade will not get that curve heading down.

Yet, you would never know that if you relied on the "open minded" Ezra Klein for your information.

Posted by: JamesSCameron | March 19, 2010 8:42 PM | Report abuse

@elf:With deals such as this, how can Democrats argue with any shred of dignity that the federal government can manage health care more efficiently than a vibrant competitive market place?

How can anyone believe you when you call a market where the companies have an antitrust exemption and where there are only 1 or 2 companies with "competing" in most markets "vibrant?"

How could the govt do WORSE than a "market" where premiums can go up 20-40% per year and outpaces inflation 2 or 3 to 1 over the long term?

Posted by: srw3 | March 19, 2010 8:46 PM | Report abuse

The chief problem, as Paul Ryan so eloquently put it, is the conflict between the CBO numbers and material reality.

Unlike an academic construction, as fiscal set up does not exist in a post modern universe where definitions create reality. Fiscal reality is the old fashioned phallocentric kind, with black and white truths and falsehoods.

While you can tell the American people all you want that this bill you never voted for will cost them less than a trillion dollars it will not stop the reality of the outlays.

Real inteligensia would be explaining these things to the public instead of spinning them fairy tales.

Posted by: gorak | March 19, 2010 8:56 PM | Report abuse

The Obamacare Deficit Fraudby Peter Ferrara

"President Obama has been barnstorming the country saying that CBO scores his health care takeover plan as reducing the deficit by over $100 billion in the first 10 years, and by almost a trillion dollars over the second 10 years. What is that based on?

Wading deep into documents available from CBO and the House and Senate Budget Committees reveals that the claim that Obamacare, in the form of the Senate health bill Democrats are now trying to deem through the House, would reduce the deficit is based on the assumption of an immediate 21% cut in payments to doctors and hospitals under Medicare. But that is just the beginning.

The growth of these payments would be arbitrarily limited over time, so this cut would effectively become bigger and bigger. For the second 10 years, the claim that Obamacare would reduce the deficit by close to a trillion dollars is based on assumed Medicare cuts over those years of over $2 trillion.

This would cause havoc and chaos in health care for America’s seniors. They would often not be able to find doctors, specialists and hospitals to provide needed health care. Most enjoying superior coverage from Medicare Advantage plans would lose that coverage, as indicated by the Chief Actuary for Medicare. Investment in new health care technology, new breakthrough medical treatments and services, and new miracle cure drugs would dry up, which has already started.


But if Congress does not allow those cuts to go into effect, Obamacare will further explode the deficit. The new CBO score regarding the House reconciliation bill does not change any of this.

America today suffers the spectacle of a President of the United States, and Democrat Congressional leadership, proclaiming to the nation that their socialized medicine plan will reduce budget deficits, based on fantastic assumptions of trillions of dollars in intractable cuts to Medicare that would leave that program unworkable in delivering health care to the America’s seniors.

Medicare already suffers an unfunded liability of $38 trillion according to Medicare’s own government actuaries. What Obama and Congressional Democrats are proposing is to loot $2.5 trillion from Medicare over the next 20 years to spend on new entitlements under Obamacare, and leave Medicare with that overwhelming unfunded liability.

In an earlier generation, when the Washington establishment enacted another health care abuse they were so certain America would love, called catastrophic coverage under Medicare, seniors protested by climbing all over the limousine motorcade of then House Ways and Means Chairman Dan Rostenkowski in Chicago. That led to repeal of that abuse the very next year by a Democrat controlled Congress. Just an historical note."

http://biggovernment.com/pferrara/2010/03/19/the-obamacare-deficit-fraud/

Posted by: Bubbette1 | March 19, 2010 9:10 PM | Report abuse

@Bubette: How many times has this increase been waived by both parties since the medicare doc 'fix' was put in (by the republican congress) in 1997? Every congress kicks this particular can onto the next congress, right? The republicans are welcome to vote against this bill if they think that it would be a good thing to kill the increase. They certainly had their chances when republicans increased these reimbursement rates 4 times (without paying for the increases) while they controlled the congress. To be fair, so did the dems when they controlled the congress. Is it more honest to kick the can down the road for a future congress or deal with it now? Republicans are welcome to come up with a way to pay for this increase if they don't want to increase the deficit. If not, whining about the fix is a bit disingenuous.

Posted by: srw3 | March 19, 2010 9:19 PM | Report abuse

@VB:Everyone from liberals to conservatives to Republicans to Democrats admit that by shoving it to 2018 means that they will NEVER pull the trigger on it especially when it will end up hitting such a large number of families that will still be struggling at that point

Would love some links to dems and liberals that say this...The time link was basically useless.

Posted by: srw3 | March 19, 2010 10:03 PM | Report abuse

Let's see..... THe CBO score could be more or it may be less. Its a guess and the estimate is "uncertain", made by Washington's "moSt rigorous guesser." Is it really worth the trouble?

One very astute observation in the article, however is "if Congress can't do hard things, then everyone is screwed."
NOW THAT'S NEWS !!!

Posted by: jborrello2 | March 19, 2010 10:10 PM | Report abuse

Like my dad taught me, "if something sounds too good to be true, it probably is."

This bill is going to cover 30M more people (many of whom can't afford insurance), not raise premiums on most others' plans, lower the defecit, and lower the debt. And, it's going to do all this without harming the already near-bankrupt Medicare/Medicaid programs when they take $250B from them. Oh, and it won't raise taxes on anyone making less than $250K.

I think we're already seeing a portent of things to come -- Washington state Walgreens just announced they would NOT accept any new medicaid customers.

How will it help reduce healthcare costs when one of the means to pay for all this is taxing medical device manufacturers?

The insurance companies it's focused on only have a 3 - 5% profit margin (about 35th on Fortune 500 company list).

It does do two pretty significant things: 1) creates a lot of new government worker jobs to run the programs, and 2) creates about 20M more Americans beholden to the government for a handout.

Is there just one supporter of this healthcare reform bill that can explain exactly how this bill will help control healthcare costs? JUST ONE?

Posted by: FloridaJoe55 | March 19, 2010 10:46 PM | Report abuse

Ezra Klein is twisting the facts. I haven't heard any Republicans beating up on the CBO. What they are saying is that the Democrats rigged the data they gave to the CBO to get the numbers they want. If the Democrats really meant to do the things they are telling the CBO they are going to do to get those numbers than that would be Governing. However, you know, I know, and Ezra Klein knows that the Democrats in Congress are never going to gut Medicare of $500 billion dollars, and let old people die. They know that some of those old people will come after them and bank on their limousines, and maybe them before they die. We also know that Democrats aren't going to cut Dr reimbursements by $300 billion. They know Doctors won't treat patients if they do that and again people will be after them. So far we're up to $800 billion more in cost, which means the cost of the bill has already doubled. There's more, but the you get the point. Then there's just plain error. Remember Cash for Clunkers? That simple, easy to calculate program cost 3x the $2 billion they originally estimated. What do you think is going to happen when the Government runs healthcare. 3x, 4x, 5x, 10X. My bet is at least 5x more than the current estimate. Ezra Klein isn't the only one blowing smoke.....Obama knows it ever more than he does! If you support the bill, support the bill, but don't lie to yourself or the rest of us about the costs!!!

Posted by: valwayne | March 19, 2010 11:00 PM | Report abuse

--"[D]oes anyone think that conservatives would be squawking if CBO had disappointed Democrats by saying the bill would save less money than either the House or Senate incarnations? If not, then keep in mind that this is a political, not technical, dispute."--

In addition to other admitted defects of your education, Klein, you seem to have a tough time with basic logic. Attempting to assess competence via an analysis of the oinkings of professional demagogues is a dope's errand. Or a straw man built by an incompetent propagandist.

Further, the problem isn't with CBO scoring, per se. The problem is with the people like you who pretend that a CBO score is unassailable justification for the trampling of freedoms and the unleashing of numerous new incompetent bureaucracies upon the beleaguered citizenry, as though each and every recent score has NOT been larded with caveat upon caveat, as though each and every CBO score is NOT inherently limited in its very nature, and part of the government justification two-step being performed ad nauseum for too many decades.

And today, now, the CBO sez, "Well, yeah, if the politicians push off the promised Medicare cuts, duh, all deficit savings are, poof, up in smoke, just like people with brains said months ago." The AMA endorses, but writes to Pelosi saying "we've" got to permanently get rid of those pending Medicare cuts. And so it will go. With further trillions sucked out of the economy to go flitting down the dream of ignorant socialist utopias.

Posted by: msoja | March 19, 2010 11:00 PM | Report abuse

srw3,

come on now you know by now I don't make this up? I'm not FastEddie or msoja (no disrespect to them!)

I honestly couldn't believe he had the decency to say it either. Lawrence O'donnell still is a dem and a liberal no? Actually a progressive or socialist, no?

http://www.msnbc.msn.com/id/3036789//vp/35889844#35889844

At around 1:11 Lawrence speculates on Deem and Pass and if its even legal??? He also said "Its never happened before" at around 2:47

My opinion. Can they do it, sure they can? Can Republicans fight it in court, absolutely. Will they win, who knows. But if it ever got to the SCOTUS I wouldn't like the liberals chances considering how stacked the court is.


Then at 13:00 or so of the clip, near the end, O'Donnell says,

"and what they never say, Sebelius came close to saying this on TV recently, you know she said the tax is delayed until two years after the 8th year of the Obama Presidency which means its NEVER going to happen. The tax is intended to cut your benefits."

Posted by: visionbrkr | March 19, 2010 11:02 PM | Report abuse

@srw3: "How can anyone believe you when you call a market where the companies have an antitrust exemption..."vibrant"?"

I'd love to hear you explain to us precisely how the antitrust exemption has in any way inhibited competition in the insurance market.

Posted by: ab13 | March 19, 2010 11:20 PM | Report abuse

Ezra, just curious - was Paul Ryan wrong about the double counting of Social Security revenues and Medicare savings?

As for the anti trust exemption - all insurance companies have it - not just health insurance. It certainly has not inhibited competition in commercial insurance, auto or homeowners insurance. Of course, insurance rates and coverage are strongly regulated by the states.

For a comprehensive treatment of the impact of anti trust legislation, see this link.

http://www.abanet.org/antitrust/at-source/09/12/Dec09-Cowie12-17f.pdf

But really, the reason why congress originally enacted this legislation, to allow the insurance industry too pool raw industry data so that all competitors - small and large would have a large pool of data for ratemaking purposes, no longer exists. The health insurers don't pool data anymore. The exemption is outdated for health insurers - but not for Property and Casualty insurers. Congress is not touching their exemption.

Posted by: MaryOK | March 19, 2010 11:57 PM | Report abuse

You win, Ezra. You win. I can't keep up with you. Every time I blog about your reckless disregard of facts as you shill for Obama, you follow with yet another "masterpiece".

You're a feckless, spineless sychopant and I have NO idea why you're offered a forum.

But, I digress. You win. I give up.

Posted by: CCPony1001 | March 20, 2010 12:01 AM | Report abuse

I read through this piece expecting Klein to address the substantive criticisms of the CBO score at some point. He did not. What a worthless, worthless piece. 10 years of taxes, 5 years of benefits. It's not hard to understand.

Posted by: tomwandresen | March 20, 2010 12:46 AM | Report abuse

@VB: I think the defacto monopoly power that 1 or 2 companies exercise in the vast majority of markets, both urban and rural is more convincing than the exemption persay. I can't imagine an antitrust exemption that would enhance competition, but I am not sure how it functions. Are you asserting that there is a vibrant market in individual and small group insurance, vibrant in the choice of provider? I am sure their profits are vibrant.

And I wasted a few minutes watching lawrence O'donnell. He doesn't really like the bill because its not single payer. I wonder if he will really vote for a repug next election because of it? But all he said is that this particular variation of self executing rule hasn't been done and that he doesn't think its a good idea. He didn't say it was wrong or illegal. Reconciliation had never been used to increase the deficit (in fact that is the opposite of why reconciliation was designed). When the parliamentarian said no, repiglicans fired him and hired the current one. Now they are questioning his "impartiality" i.e. he might rule against them on this use of reconciliation.

I don't care if he is a liberal, he is not a supporter of this bill and was coming up with reasons it was bad. That is the only example of this view I have heard on the left, besides other bill haters like FDL. Everyone says that it is not possible to know what will or will not happen in 2018 so his guess is no better than anyone elses. Who would have guessed in 2000 that the US would have an elect an african american president in 2008 who ran on health care reform?

Posted by: srw3 | March 20, 2010 1:22 AM | Report abuse

I would really like to say something nice and thoughtful in response to this article.

Others have done an amazing job.

Bottom line. Every tiny piece of this entire Health care/insurance/reform/legislation has been a horror show of what corruption in government could be and is under the Obama Administration.

There has never been a clear plan. Many plans have come out and each one changes the game significantly.

There is only one thing that stays the same. Obama wants it passed right now.

So what is in it for Obama that no matter what plan the Dems, (Republicans not allowed), come up with must have one note that he is happy with and I think we all know that one note.

Government control over the economy. Step one...health care because you can make a lot of easy arguments that can have an appeal.

Once that door is opened there will be more bills that will not be as easy to sell but they will claim that they have a mandate because HC got through.

Foolish Dems.

Your grandchildren will hate you and your names will always be attached to the President who was the worst president ever who ALMOST destroyed America.

You children's hero's will not be their parents or grandparents, but the people who saved this country from your actions. They will be embarrassed as well as resentful that you took away the American Dream for a ride on an airplane.

I had an uncle who was involved in Chicago politics. He was low level compared to Obama's gang. He shamed the family. That was over sixty years ago, but the family stories have never changed. He was great, then went down in a firestorm that wiped out everything everyone had thought good about him before his swan dive.

I see the same in the very near future for all of the Obama hangers on as well as the man himself. Pelosi and Reid are done as of months ago.

George Soro's dream of taking down the U.S. will have to wait. We are going to take back our country.

Posted by: letscheck | March 20, 2010 5:21 AM | Report abuse

Neither the CBO nor the president’s sycophants in congress have accounted for the cost shifting that has been happening for years and will only worsen as the Medicare Commission attempts to squeeze more savings from Medicare and Medicaid.

When Mr. Obama and other demagogues demonize insurance companies, they fail to acknowledge that providers simply charge higher fees for patients covered by group plans to compensate for low reimbursement rates from government plans. The costliest patients to cover (the elderly and poor) are already in the public system.

Mr. Klein and his central control comrades know that this process will eventually force those of us who are satisfied with our current plans (an overwhelming majority according to polls) into state controlled plans.

Posted by: dcn1 | March 20, 2010 7:47 AM | Report abuse

srw3,

actually that was ab13 that asked you that but I agree with him/her so I'll answer.

I'm against monopolies and limited competition. I know that selling across state lines works because I've seen it work. BCBS in the mid-atlantic region about 10 years back expanded as it set up seperate companies in different states (completely legal). Amerihealth (which is Independence BCBS of PA) formed in NJ and WellChoice (Empire BCBS of NY selling in NJ). This increased competition and had a serious positive effect on price. Now we're seeing it go the other way. United Healthcare bought Oxford several years back and they just bought Healthnet last year. It shouldn't be allowed. The regulators have the power to stop it but they don't.

i'm sorry but "i wasted a few minutes" is a sad argument. Watch it. If you don't want to waste time then watch for the times I mentioned. That's why I mentioned them. It sounds to me like you have your mind made up and no one even if they prove you're wrong or your positions are wrong could convince you otherwise. that's a shame. Then you revert back to your "repiglican" tactics. Again I don't disagree with you but if a point is made. If you said "would love to see a link to a dem or liberal that said this" and I gave you chapter and verse of it but you couldn't be bothered it honestly reflects poorly on your judgement.

Posted by: visionbrkr | March 20, 2010 10:08 AM | Report abuse

@VB:
Isn't it the case that there are very few if any truly competitive (vibrant) markets in the private insurance market? That was my point.

"The health insurance market is increasingly dominated by fewer carriers, with two insurers controlling 70% of the market in 24 states in 2007, according to a new report by the American Medical Association...The AMA analyzed 43 states and 313 metropolitan markets against an index used by federal regulators, looking at HMO and PPO enrollment in those areas between 2006 and 2007. Some 99% of metro markets in 2007 were “highly concentrated,” up from 94% in 2006. In more than half of metro markets, at least one insurer had a market share of 50% or greater, up from 40% in 2006, according to the AMA. " link http://www.modernhealthcare.com/article/20100223/NEWS/302239940#

I did take the time to watch the clips (hence the several minutes comment) and I think that I addressed your points about whether or not it was legal or not. Odonnell didn't say its illegal, just that this variation hasn't been done before, just like repugs using reconciliation to raise the deficit was unprecedented.

I don't think you read my post carefully. O Donnell is pissing on the bill because he thinks its not liberal enough ie no single payer. He was never asked if he ultimately supported it or not. I am guessing that on balance he does support it. He has criticisms of the funding mechanism, but it is just his opinion what will happen in 2018. At least there is a plan to make the bill deficit neutral or a little deficit reducing.

Remember you said "Everyone from liberals to conservatives to Republicans to Democrats admit that by shoving it to 2018 means that they will NEVER pull the trigger." L Odonnell (and FDL) does not equal everyone. NO one even knows who will be president or who will be in congress then.

Posted by: srw3 | March 20, 2010 10:54 AM | Report abuse

srw3, why is insurer concentration a problem if they are not exhibiting any monopoly power? Why do the insurers that dominate the market earn the same low margins as those in more competitive states?

-----"Are you asserting that there is a vibrant market in individual and small group insurance, vibrant in the choice of provider?"

Yes, that's exactly what I am asserting. The individual and small group markets are extremely competitive. In most states you've got Aetna, United, Golden Rule, Humana, Assurant, and at least one BCBS company competing in that space. Margins are razor thin and consumers are very price conscious. There's a lot of shopping and switching carriers going on.

The truth is the exemption has no negative impact on competition. But don't take it from me, take it from Austin Frakt:

---"Those who claim that the antitrust exemption is the main reason a few insurers have substantial market power don’t understand the narrowness of that exemption’s scope. The law at issue, the McCarran-Ferguson Act, shields most aspects of “the business of insurance” from federal (but not state) antitrust oversight. This means that only those insurer activities dealing directly with providing insurance–think underwriting risk, setting rates, defining benefits, and the like–are not ordinarily subject to federal antitrust scrutiny.

There are exempt insurance practices that, at least in theory and under certain conditions, could help insurers defend and expand their market share against competitors. But the exemption simply does not shield the most straightforward kinds of conduct that make companies big."

http://www.kaiserhealthnews.org/Columns/2010/March/030410FraktCrosby.aspx

Posted by: ab13 | March 20, 2010 11:18 AM | Report abuse

srw3,

i get that he thinks it isn't far left enough but that wasn't the question. The question was "will the excise tax ever happen" and o'donnell agreed with me. You said you'd like to see a link that proved that. I showed it to you. Why can't you admit that I'm right?? I've admitted that you're right in your issue of market concentration although I don't think it'll do much for costs.

My state of NJ has market concentration too but not as bad as some but we've also got the strongest MLR's in the country.

Last year BCBS had 50% of the market, Aetna about 20%, Oxford about 15% Healthnet about 10% and Cigna about 5%. (this is the small group and individual markets).

We also have an MLR at 80%, highest in the country. What happened? Costs were at 85%. Less market concentration won't help. It won't force insurers to negotiate better rates with hospitals that are going bankrupt at an alarming rate (14 over the last 3 years.)

Posted by: visionbrkr | March 20, 2010 11:56 AM | Report abuse

@ab13:The individual and small group markets are extremely competitive...in most states you've got Aetna, United, Golden Rule, Humana, Assurant, and at least one BCBS company competing in that space. Where is you proof? the article I cited says exactly the opposite.

How does this square with

"Some 99% of metro markets in 2007 were “highly concentrated,” up from 94% in 2006. In more than half of metro markets, at least one insurer had a market share of 50% or greater, up from 40% in 2006, according to the AMA. " link http://www.modernhealthcare.com/article/20100223/NEWS/302239940#

That sounds like a virtual monopoly to me. The exemption is not as important as the defacto monopoly that most markets have, a company controlling more than 50% of the market.

"Why do the insurers that dominate the market earn the same low margins as those in more competitive states?" Where is the data to support this? Do you have access to the level of data granularity to prove this? Link? I don't believe that.

Posted by: srw3 | March 20, 2010 12:01 PM | Report abuse

@vb: read your own quote "Everyone from liberals to conservatives to Republicans to Democrats admit..." I concede that L odonnell agrees with you but he isn't "everybody", or even a majority or even a plurality of "liberals" you will need to do better than 1 person. Odonnell also is not any kind of public elected or appointed democratic figure, just a pundit....

Posted by: srw3 | March 20, 2010 12:16 PM | Report abuse

@ab13 and VB: "Are you asserting that there is a vibrant market in individual and small group insurance, vibrant in the choice of provider?"

Yes, that's exactly what I am asserting."

You need to read the whole article.
The money quote from the article you cited:

"It is far more plausible that a high proportion of premium increases are due to a combination of concentration in the provider market and adverse selection, especially in the nongroup market." Just replace concentration in the provider market with monopoly power, a totally appropriate reading of the phrase, yes?

Posted by: srw3 | March 20, 2010 12:25 PM | Report abuse

Well visionbrkr, I think that given our reliance on private insurers, it is their job to bargain for better rates from all providers. That is why we need a cap on premiums, to put pressure on insurers to get better deals. right now they just pass on increases to their premium holders. This is the start of the adverse selection death spiral, insanely rising premium costs. Where should the pressure for lower health care costs come from?

Posted by: srw3 | March 20, 2010 12:34 PM | Report abuse

srw3,

"everyone" in that context does not mean EVERY SINGLE LIBERAL. It means "people-one or more" from that group. You asked for an example, I gave it and then you chose to discredit him, fine.

if i meant every single liberal I would have said every single liberal.

Posted by: visionbrkr | March 20, 2010 12:37 PM | Report abuse

@vb: I don't know anyone that would interpret "Everyone from liberals to conservatives to Republicans to Democrats" to mean "people-one or more from that group."

You could say at least 1 liberal or a few liberals and many more conservatives or something like that if you can only come up with one.

I freely admit that Odonnell does not think that the bill is very good and that the funding mechanism is suspect, if that makes you feel better. I just don't think that your phrasing was accurate.

Posted by: srw3 | March 20, 2010 12:45 PM | Report abuse

srw3,

I have better things to do honestly than scour the internet for lists of liberals interpretations of what will happen 8 years from now (assuming the bill passes). Maybe they haven't been asked? Maybe they haven't been quoted?

It just seems to me that you're clutching onto my "phraseology" and how you interpreted it.

What was the discussion about again anyway?

Posted by: visionbrkr | March 20, 2010 3:31 PM | Report abuse

@srw3: "You need to read the whole article.
The money quote from the article you cited:

"It is far more plausible that a high proportion of premium increases are due to a combination of concentration in the provider market and adverse selection, especially in the nongroup market." Just replace concentration in the provider market with monopoly power, a totally appropriate reading of the phrase, yes?"

------------------

Do you understand the difference between providers and insurers? I don't think you understand what the quote you posted means. Frakt is saying that providers, i.e. doctors and hospitals, are the ones who are concentrated which drives up prices.

As for your questions about sources, for years I led a project analyzing insurer data in all of the states my company does business in. From a combination of rate filings, SEC reports, investor reports, and state insurance departments we were able to construct a pretty complete database of all carriers in the IM and small group markets, inclduing their membership, revenue, and profit margins. Every state had multiple carriers, and since then (I haven't worked on this again for a few years) it's gotten even more competitive, with some of the bigger national players trying to grow their individual business. Yes, there are usually one or two that are the biggest, but there are a number of other carriers competing, giving customers plenty of options to choose from.

I read that article you linked, and they provide little backup for their claims nor do they give much detail about how they got their numbers or which market segments they're talking about. There is nothing to indicate if they are talking about individual and small group business only or including large group. Also, look at the source, the AMA. Of course they'll claim the insurers have a monopoly and are to blame for high costs, when anyone with any knowledge of the market situation knows that providers have nearly unchecked power to raise prices and drive higher costs through fee-for-service medicine, just as that quote from Austin Frakt that you posted said.

That article also implies that Anthem's rate increase in CA was driven by their dominance in the market, claiming that they have 57% of the IM membership in the state. But this completely ignores the fact that Anthem lost money on their CA IM business last year, so this supposed "monopoly power" didn't mean jack. There is absolutely zero factual basis for claiming that insurer concentration or antitrust has had any adverse impact on premiums.

Posted by: ab13 | March 20, 2010 5:29 PM | Report abuse

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