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Paul Ryan and the true cost of health-care reform

After the Blair House Summit, a bunch of you e-mailed to ask what I thought of Rep. Paul Ryan's argument that the bill "does not control costs" and it "does not reduce deficits." There's a lot going on in Ryan's remarks (which you can read here), so this might take awhile. But before we dive so deep into the weeds that we're seeing earthworms, here's the basic conclusion: Ryan's critique scores some clean points and also deploys a couple of dirty tricks, but it doesn't damage the bill's claim to reduce deficits and doesn't even engage whether the bill controls costs.

But let's begin at the beginning. Ryan says that "the true 10-year cost of this bill in 10 years" is $2.3 trillion. On this, Ryan is right, but misleading. In Ryan's favor, Democrats have artificially lowered the cost of the bill by pushing its start date back to 2014, even as its 10-year budget window begins in 2010. The 10-year cost of the bill is really only counting six years of operation. This was a deceptive effort to keep the bill's price tag under $1 trillion, even as the bill's price tag was really quite a bit more. Point for Ryan.

Ryan gets the $2.3 trillion by looking at what health-care reform will spend in 2019 and extrapolating that number out across the next 10 years. I'll trust that he did the calculation correctly. The problem is that Ryan uses the classic “This Is A Big Number" technique to imply that the bill is financially irresponsible, when putting the number in context would show just the opposite.

According to the Congressional Budget Office, the bill cuts the deficit far faster in the second decade than in the first. That's because the revenues and savings grow much faster than the spending. The bill might cost $2.3 trillion, but it either raises or saves $2.95 trillion, for a net deficit impact of negative $650 billion. So although Ryan uses the price tag to imply that the bill's spending is somehow worse in the second decade than in the first decade, he omits the information that's actually relevant for his presentation on cost control and deficit reduction.

I imagine the congressman would respond to my previous point by saying that he doesn't buy the CBO's estimates. His argument here has to do with how the federal budget is structured, or what's called "double-counting." And it's complicated, so bear with me.

Social Security and Medicare both have trust funds which are supposed to store money to pay for the program's future costs. If a new policy saves Social Security $50, and the government then doesn't have to borrow $50 that it would otherwise have had to borrow to pay for Social Security, that improves the deficit outlook by $50. With me so far?

But let's say that the government then takes that $50 from the trust fund and sends it over to an education program. From the perspective of what's called the "unified government budget" -- which is the budget we use -- there's no difference because the government is not borrowing any more money. To use an example Peter Orszag favors, from an accounting perspective, this is the same as a parent giving his son $50. The parent may be $50 poorer, but the family's finances are unchanged.

That trust fund, however, has to eventually be paid back. If you don't leave the money in the trust fund, then you have to assume that other programs will be cut later when the trust fund's debts come due. You have to assume, in effect, that you'll take the money back from your son, or from another part of the family budget. Otherwise, you're double-counting the cash, because you're assuming that it lowered potential borrowing for Social Security (count one) and for the education program (count two).

According to Ryan, there's about $124 billion in double-counted money in the bill. Assuming his math is correct (and no one I talked to said it wasn't), that's a fair critique. What isn't fair is to suggest that this is about the health-care bill. This is how the government does its accounting.

The money flowing into the trust funds is continually used to pay for other government priorities. And borrowing for other government priorities is not built into trust fund estimates, even though that borrowing also competes with the trust funds in the future (live by unified government accounting, die by unified government accounting). This was true when Rep. Ryan voted for the Medicare Prescription Drug Benefit and the Iraq War, and it's true now.

And many budget experts think it's the right way to do things. Though it's true that the trust fund will have to be repaid either through spending cuts or tax increases, the trust fund will be repaid. Otherwise, the government defaults and everything goes to hell. This assumption that the government will pays its debts is not only necessary for accounting purposes but also for, say, investing in Treasury bonds, or in the stock market, or any other facet of American economic life that presumes the continued fiscal soundness of the American government. You can argue, they say, that the government shouldn't use trust fund money to do other things, but that's not the same thing as saying the accounting shouldn't presume repayment.

But whether you think the accounting is right or its wrong, it's not playing fair to change it on the fly. By the rules that both Republicans and Democrats use, the bill cuts the deficit.

Wherever you fall on double-counting, $124 billion isn't much money in the scheme of this thing. Ryan gets his big money a few paragraphs later, when he makes a much more dishonest argument. The play here is simple, and it's beneath a politician of Ryan's reputation: He attaches the cost of fixing the Medicare Sustainable Growth Rate to the health-care reform bill.

For a longer explanation of this issue, head to this post. The short version: In 1997, Republicans passed the Medicare Sustainable Growth Rate into law. The provision created a simple equation meant to hold down Medicare costs and cut doctor payments when they rose. But the provision was passed when Medicare's costs were uncommonly low. Suddenly, SGR was forcing huge cuts rather than the modest adjustments that had been intended. So legislators began voting to delay implementation rather than cut doctor payments.

The first delay was passed in 2003, under Republicans. Then again in 2005, also under Republicans. Then in 2006, under Republicans. Then in 2007 and 2008, under Democrats. For those keeping count at home, this is a policy in a Republican bill that Republicans delayed three times and Democrats delayed twice. What's needed is to reform the system so we stop delaying it. And we will need to do that -- and this is important -- whether or not health-care reform passes.

To put this slightly differently, imagine you're buying a new house. But your old house needs $20,000 in roof repairs. You will have to pay for those repairs whether you move or whether you stay, because you can't have your roof caving in come the next heavy rain. Are your roof repairs part of the cost of the new house? If you think so, then you agree with Ryan. If not, then you don't. The SGR problem predates health-care reform and exists irrespective of health-care reform's fate. Attempts to lash the two together are nonsensical.

This has gone on long enough, so we'll address the final point quickly. Ryan says that the chief actuary of Medicare says the administration is bending the cost curve up. That's not quite what he showed.

Rather, health-care reform initially increases spending to cover the uninsured. That raises the level of spending, but not the curve. The curve actually flattens. If you extend the trend out to the second decade -- which is what Ryan does in other parts of his presentation, including for the $2.3 trillion figure -- the curve goes down. Kevin Drum graphed it here, concluding that "a decade after the reforms kick in, we'd be providing health care to at least 30 million more people and spending no more than we would if we did nothing," which is to say, the curve-bending elements of the plan would've saved enough money to cancel out the new coverage expenses.

To sum up, then, Ryan makes some good points about the true cost of the bill and realities of the federal budget. But he purposefully omits any mention of the bill's expected savings, disingenuously attaches the price tag of a broken Republican policy onto the health-care reform bill, and selectively stops extrapolating trends when they don't fit his points. It's a presentation designed to make the bill look less fiscally responsible than it really is.

But don't listen to me. Robert Reischauer is the head of the Urban Institute. He's also one of the CBO's most revered former directors, in no small part because his relentlessly honest cost estimates helped doom Bill Clinton's bill in 1994. I reached him earlier today and asked whether he thought this bill made fiscal sense. "Were I in Congress and asked to vote on this," he replied, "I'd vote in favor." The bill isn't perfect, he continued, "but it at least has the prospect for creating a platform over which more significant and far-reaching cost containment can be enacted."

The same cannot be said for the status quo.

By Ezra Klein  |  March 1, 2010; 5:26 PM ET
Categories:  Health Reform  
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Comments

Thoughtful and well-researched. This is why I read your stuff every day.

Posted by: crawfoad | March 1, 2010 5:46 PM | Report abuse

Thanks for the post Ezra. Ryan probably had the most persuasive, if still wanting, GOP argument of the summit. Your analysis seems fair.

Posted by: YoungDem86 | March 1, 2010 5:48 PM | Report abuse

Enjoyed your piece on Ryan. Though, it seems like you are saying two wrongs make a right - yes, there's double counting, but this is how things are done in DC. Fine, but shouldn't intellectually honest wonks and reporters be open about the fact that there is double counting? That tells me that the numbers that get bandied about need to be revised, perhaps, but more importantly there needs to be a more forthright discussion about what this bill means for Medicare.

Which gets me to an issue that I am really interested in and would love to learn more about - what does the bill mean for entitlements? My big concern is that, with double counting, there has been some fudging of the impact on Medicare. The administration says that they are saving half a trillion and also making the program more solvent (sorta the McArdle argument: http://www.theatlantic.com/business/archive/2009/12/cbo-democrats-double-counting-medicare-savings/32538/). That just doesn't seem right to me. I don't have a problem with the point that entitlements will need to be addressed separately from HCR now, but what bothers me is there has not been an honest conversation about that in the HCR debate. You would know better than I do, of course. Have you written on this much? What I don't understand - as someone who just reads about health care casually - is how we have long-term obligations in the trillions, and many doctors refusing to accept Medicare, and there isn't really an effort to change that in a serious way. Medicaid is also a big issue, obviously reflected by the complaints from many governors. I'd like it to be federalized, but I assume the issue there is states have an incentive to adopt more lax qualification standards?

Thanks for the research, interesting stuff. You gotta do a Bloggingheads with Ryan sometime!

Posted by: gocowboys | March 1, 2010 5:49 PM | Report abuse

"But don't listen to me"

No Ezra, I think I WILL listen to you. Posts like this are awesome. Thank you.

Posted by: Chris_O | March 1, 2010 5:52 PM | Report abuse

Oh, I would just add this: props for valuing your readers. There was demand for a piece on this and you delivered. I hope success doesn't change you too much down the road!

Posted by: gocowboys | March 1, 2010 5:56 PM | Report abuse

Well, you've managed to outwonk Paul Ryan. What this blog post really needs are some fancy graphs.

Posted by: benintn | March 1, 2010 5:59 PM | Report abuse

"And we will need to do that -- and this is important -- whether or not health-care reform passes."

No. And THIS is important. You need to "fix" SGR is you're not reforming the system, because you're not, well, reforming the system.

But if you take on the issue of health care REFORM, and want to be considered financially responsible, then you need to consider all elements of REFORM. This bill addresses insurance companies, hospitals, drug companies, medical device companies and a slew of other pieces. Except one. Physicians. That was left out of the bill. NO attempt was made to reform physician compensation. Not a little, none. For one reason, to buy their support. That's the problem. That's the reason to add the SGR fix to the cost of the bill. The rest of the bill wouldn't be possible without the doc fix. Its about as quid pro quo as you can get.

Posted by: wisewon | March 1, 2010 6:15 PM | Report abuse

Obama's plan significantly delays the onset of the excise tax on expensive benefit plans which was one of the primary means by which defict reductions were to have been achieved. In its place we have a higher tax on high-income folks. But the income tax won't curb health expenditures - quite the opposite, in fact - nor, I've read, would it raise near as much money.

Bottom line, the various Democratic bills' savings are very real and quite possibly understated - Medicare costs have outstripped early projections by a mile - while many of the "savings" are suspect/improbable. There's good reason to doubt, for instance, whether a future Congress would have the resolve to let the excise tax on high-cost benefit plans take effect when the current Congress, loaded as it is with Democrats, can't find the will do so. Just look at what successive Congresses have done with the Medicare fee "fix" - pushing off mandated fee cuts year after year afer year.

It's this type of Pollyanish accounting which has left us with Medicare on the verge of insolvency. If there's $500 billion to be saved in cutting Medicare costs perhaps we had better use it as a down payment on that program's $37 trillion liability.

Posted by: tbass1 | March 1, 2010 6:31 PM | Report abuse

--"According to the Congressional Budget Office, the bill cuts the deficit far faster in the second decade than in the first. That's because the revenues and savings grow much faster than the spending."--

I read that, Klein, read your readers' comments (Oh, THANK you!!!), and wonder what it is that people use their brains for, cause it ain't for thinkin'!

Revenues and savings grow faster than spending. Oh, that's rich.

Are the revenues and savings growing faster than the spending up Massachusetts way? No, I don't think so.

//begin cite
Commonwealth Care, the three-year-old Massachusetts program providing subsidized health care to low-income residents, is poised to get costlier in the upcoming fiscal year.

State spending to subsidize coverage for Commonwealth Care’s 150,000 members – a number expected to climb by 24,000 in the fiscal year beginning July 1 – will increase nearly 7 percent per subscriber, in part because state regulators project them to be sicker, on average, than they were this fiscal year.

The increase, expected despite a proposed reduction in dental benefits and increase in co-pays for most prescription drugs, would bring monthly costs paid by the state per subscriber to $425.67 from $398.97.
//end cite
http://www.wickedlocal.com/sharon/news/x1025060961/Health-reform-program-costs-rising

The state-overseen insurance companies will be limited to a 7% price increase this year, while Patrick is requesting an additional 16% out of the citizens' pockets for health care, in addition to petitioning the federal government for hundreds of millions in extra Medicare funds.

And your teeth are not the government's priority.

And those damn immigrants are suing the state for their right to that commie care.

Marvelous. Oh, wow. Thank you, Ezra!

Posted by: msoja | March 1, 2010 6:40 PM | Report abuse

"To put this slightly differently, imagine you're buying a new house. But your old house needs $20,000 in roof repairs. You will have to pay for those repairs whether you move or whether you stay, because you can't have your roof caving in come the next heavy rain. Are your roof repairs part of the cost of the new house? If you think so, then you agree with Ryan. If not, then you don't."

A very useful analogy!

Posted by: slag | March 1, 2010 6:44 PM | Report abuse

There are two problems with healthcare. The problem voters want fixed is rising premiums, rising costs, etc. The fact is that most of them have insurance, and every year it costs them more than the year before.

The problem *liberals* want to fix is that 47 million people don't have insurance. Of course, this is not an entirely different problem -- assuming that health insurance is something people want, then it stands to reason that we got costs under control people would actually buy their own insurance.

In other words, if you solve the problem *voters* want solved, then the problem liberals want to solve actually becomes *smaller*.

This presents its own problem, since solving the 47 million problem is just an excuse for universal healthcare. Libs don't want any particular problem solved, they want a specific solution. Any solution that threatens to increase coverage (by lowering prices, for example) reduces the 47 million, and along with them, the "need" for universal care.

I know people who honestly believe that liberal Democrats secretly want high unemployment because it increases the number of uninsured. I don't know if that's true. But suddenly it doesn't seem so improbable that liberal Democrats rely on expensive healthcare dysfunction to make their costly utopian liberal healthcare reform seem "revenue neutral."

And I have to admit, I myself never looked at it this way until I read Ezra Klein picking at Paul Ryan's argument. Now more than ever, I believe Ryan is correct.

Posted by: cpurick | March 1, 2010 6:52 PM | Report abuse

This article is excellent. Thank you for the comprehensive explanation. Keep up the great work!

Posted by: karlasingh | March 1, 2010 6:55 PM | Report abuse

When I looked at this post, I never thought I'd read to the end. And then I did.

Posted by: ebra | March 1, 2010 7:02 PM | Report abuse

Thanks for such a thoughtful article, Ezra!

I had been looking long and hard for an honest analysis of Ryan's numbers, which had seemed fair and potentially damning during the summit.

Your research and work here is much appreciated and very illuminating.

Posted by: TomDreisbach | March 1, 2010 7:28 PM | Report abuse

--"The curve actually flattens."--

You mean that you hope and pray that it flattens. You mean that a government agency that's been wrong umpteen times in the past has conjured up a projection that suits your bias, and you're going to pronounce it as gospel, probably right on past the time when it can be proven another example of bureaucratic incompetence.

I mean, seriously, when was the last time anyone won a bet on the side of governmental fiscal responsibility?

Posted by: msoja | March 1, 2010 7:40 PM | Report abuse

fair and honestly assessment of Ryan. Good to see.

I will dispute wisewon's take that Pharma has take a "hit" in reform. Remember they raised prices greater than any hit they were set to take in reform. Two steps forward, three steps back.

And everyone's support was bought. Hospitals (with the pushing off of their responsibility to 2019) docs with the SGR, insurers with limiting the MLR. That's why most of us have no faith with the fiscal responsibility of reform. Its like trusting a heroin addict to stay clean on his/her own. Sorry can't be done without tough love and someone watching them closely. Let's hope that after reform passes Ezra keeps posting on how true they are keeping to the promises made.

Posted by: visionbrkr | March 1, 2010 8:39 PM | Report abuse

Mr. Klein, it’s disingenuous to say that the SGR fix is a separate issue. Good portions of the supposed savings in Medicare are a direct result of the SGR going into effect at the end of the year. ie- there wont be any future doc fix. That is highly unlikely to happen, and as such, the cost of the fix should be included in the calculations that CBO does on the bill. Who voted for what is irrelevant to the subject. The important question is; will the doc fix be continued or not? If so, then you need to base your costs on the higher reimbursement rate. THAT was Paul Ryan’s point.

Posted by: DarkstarFX | March 1, 2010 8:56 PM | Report abuse

Color me skeptical too that we will actually see the cost cutting in the next decade (unless the government is under quite a lot of stress due to the threat of a default).

Ezra, can you please compare the cost cutting in the Senate plan vs the voucher/credit system in Paul Ryan's Roadmap for America? One of the big critiques of his plan by progressives was that he provides less financial credits per person to spend on health care. And yet, if we add 30 million people to the health care rolls in a decade and spend the same amount as today, wouldn't that result in less spending per person too?

Help me out here, who has the less spending per person?

Posted by: Chugwater | March 1, 2010 9:01 PM | Report abuse

msoja, is the Massachusetts situation all that relevant of a comparison? I know that Ezra keeps harping on the fact (which maybe it is and maybe it isn't) that the pending federal reform is basically structured like the Massachusetts reform. But general structure doesn't necessarily have anything to do with projecting costs, revenues, and savings 20 years down the road. Is the pending federal reform utilizing the same taxes at the same rates and the same savings mechanisms with the same bite as Massachusetts uses for its program? If so, then maybe you have a point (though, again, one year's numbers do not a 20-year trend make); if not, then I don't see how you've outsmarted the rest of us.

Posted by: JonathanTE | March 1, 2010 9:04 PM | Report abuse

I watched Paul Lewis at the summit, I thought he did OK. I noticed that every time a Republican presented his ideas, The President jumped on their ideas to rebutt them. I also noticed when Ryan finished the President never responded. I read your artical Ezra and I wondered if I had been looking at the same presentation. You are throwing up a lot of gorilla dust to refute most everything Ryan said. Dumb as I am I'm probably wrong but then I started lookin up some of your stuff you've put out over the years and I found my answer.

Posted by: gs56 | March 1, 2010 9:12 PM | Report abuse

As so many have commented, this is probably the most important wonkery Ezra would have done since the summit. Regardless of all the politics, and no doubt so many of those aspects are important, addressing Ryan's cost critique is heart of the matter.

Ryan not considering second decade saving is clearly politics. CBO is bound by law (that is what I understand) to restrict their calculations for the first decade only. But any sane person will need to look long into future since these are really long term issues.

However, like Ryan I also succumbed to the doc fix issue. Ezra has some persuasive argument even though I am not fully sold on this explanation. The reason is neither Obama nor anyone from Dems ever bothered to set expectations of people before starting HCR that there is some substantial cost to be encountered before hand.

When a family has $20K as expenses to undertake immediate necessary roof repairs; what that family do is be careful in buying a 'new house'. That is the core message here. If already we have so much 'unfinished business & pending bills to pay' why are we thinking about new purchases and not concentrating on paying off the existing mess?

That is where so many folks think Obama / Dem approach about 'doc fix' as 'compromised'.

Finally, I would hope Ryan himself and Megan at Atlantic will respond to Ezra's critique. We will see then how it settles.

Posted by: umesh409 | March 1, 2010 9:15 PM | Report abuse

--"[I]s the Massachusetts situation all that relevant of a comparison?"--

You bet. The main thrust in both involves getting insurance to as many as possible, with threats of impoverishment or incarceration to those who don't wish to comply, along with various subsidies to those of a particular voting constituency.

And, it is at least as relevant as any other example of the promises of crooked socialists meeting the rocky road of reality.

It isn't just something limited to health care, though. These stupid schemes never work in the long run. They CAN'T. They do violence to the simplest rules of economics (and the twits stand around wondering why prices are shooting through the roof), and they fail for the very simple reason that they are abridgments of our liberty, of freedom.

Posted by: msoja | March 1, 2010 9:37 PM | Report abuse

Sorry Ezra, but if I give $50 to my kid I am $50 poorer. He will quickly blow the money and be broke again - and I will still be poorer; an apt picture of our govt.
Sorry again, but if I need to pay $20,000 to fix the roof of my old house, then I need to add that to my overall budget even as I move into a new house. What do you expect me to do? Tell the contractor 'That's not my house anymore.'.
Sorry one more time, but sooner or later - and I think it will be very soon - the Fed govt will be compelled to stop its fantasy shuffling of money. It is no longer acceptable to pretend the lunatic rules of the Fed govt are in force, so we must all play along. We Americans are sick and tired of out-of-control spending in DC and HCR is our vehicle for making the point firmly and directly. When Mom finally walks in to a kid's room and finds him making a big mess, he won't get anywhere pointing to a messy corner of the room, saying "But Mom, I did that part last week, so what I did today isn't really so bad." He's busted and the whole thing needs to be cleaned right now.
Finally, I am most sorry to say we no longer have any right or reason to assume the Fed Govt will repay its debts: Our comeuppance is at the door, and, as a matter of fact, Hell is with it.

Posted by: mschilling001 | March 1, 2010 10:01 PM | Report abuse

erza is either willfully misleading people or he just not that bright.

just because the bill doesnt add to the deficit does not mean its fiscally responsible. to believe that you'd have to think that there is no opportunity cost to raising half a trillion in taxes and taking half a trillion in medicare cuts and using all this money to pay for MORE health care!!

the opportunity cost of that in terms of forgone deficit reduction is HUGE.

im sorry ezra, only a snake oil saleman who wants the country to fail would argue that reforming 16% of the country's economy, and spending a trillion dollars to do it, and only reducing the deficit by 1% or $100 billion dollars in the process is fiscally responsible.

bush's recklessness was bad enough, but at least his spending was at a time of relative prosperity, when we could most afford it. obama's recklessness will not be viewed as charitably in the history books.

Posted by: dummypants | March 1, 2010 10:06 PM | Report abuse

Let's take Orzag's teenage son analogy and inject some reality into it. You have $50 and you give it to your teenage son. Up to this point, your family's overall financial health hasn't changed. But now your teenage son has $50, and not a real good grasp on what it takes to earn that money or what can be purchased with it. First, he calls his girlfriend and asks her to dinner and a movie. Next, he hops on the family I Tunes account and buys $20 worth of new "mood" tunes. You gave him a $25 gift card for Christmas, and he's sure he never used it. He's wrong, of course, and
the $20 goes to your debit card. On the way to pick up his date, he puts $10 of gas in the tank. He thinks he's being responsible by paying for his own gas. By the time he gets home, he has used $20 of gas. At dinner, the bill is $30. Your teenage son is short for the movie and any treats now, but he has a credit card you gave him for emergencies. To a teenage boy, this certainly fits the bill. He puts $20 for tickets and $20 for popcorn and drinks on your emergency card. By the time the bill is due, he'll have the money. After the movie, he spends the rest of the money on ice cream. Net hit to the family finances -- $120. That's how double-counting really works!

Posted by: jayfrid | March 1, 2010 10:10 PM | Report abuse

Here is one of the reasons why you should not trust any number games being played by the Obama team.

http://otrans.3cdn.net/45593e8ecbd339d074_l3m6bt1te.pdf

link to Romer and Bernstein paper on Stimilus' impact of job market. The graph on page 5 is telling (where Ms Romer predicts it won't go above 8% with Stimulus).

A simple question to ask Obama team is "Why should we trust you your numbers now?" Apparently, there is no consequences for failures in this administration. If I were Obama, I would fire this fat idiot "advisor" today!

Remember "You are doing heck of a job Brownie" moment? I think Obama is worse. Atleast, Bush realised he had an idiot working for him, Obama, sadly, doesn't.

Posted by: darkskin1977 | March 1, 2010 10:12 PM | Report abuse

--"erza is either willfully misleading people or he just not that bright."--

In Klein's case, those are the two sides of his one thin coin.

Posted by: msoja | March 1, 2010 11:10 PM | Report abuse

"That's because the revenues and savings grow much faster than the spending."

Would that be revenue with or without cap and trade? The point being, Obama's revenue projections have been woefully overstated to date.

Posted by: bgmma50 | March 1, 2010 11:45 PM | Report abuse

"What's needed is to reform the system so we stop delaying it. And we will need to do that -- and this is important -- whether or not health-care reform passes."

What's not needed is to then turn around and spend the savings on another entitlement program.

Posted by: bgmma50 | March 1, 2010 11:49 PM | Report abuse

Talk about misleading people: "The bill might cost $2.3 trillion, but it either raises or saves $2.95 trillion, for a net deficit impact of negative $650 billion"

How much does it "raise" and how much does it "save"? We're talking about taking money from some people to buy health care services and products for other people. If it actually saves some money, wouldn't that come out of the cost? Talk about double counting... I don't doubt that Klein's smart, but he thinks his readers are dumb.

Your SGR issue is a total red herring that ignores the facts. I understand that we really want to bring more health care to more people. We just need to do it in a way that minimizes the cost to the rest of the us. Ignoring the politically difficult cost cutting is the real problem to address, and sadly Ryan is one of the few on either side to see that clearly.

Posted by: staticvars | March 2, 2010 12:00 AM | Report abuse

"The SGR problem predates health-care reform and exists irrespective of health-care reform's fate."
Republican.....Democrat...whomever...371 billion (if his math is correct) is still going to have to be spent to cover the cost. Regardless of how you feel about Ryan politically (or his political motivation), NOT including that figure in serious health care reform is disingenuous.

Posted by: bdk808 | March 2, 2010 1:52 AM | Report abuse

Ezra,

For a Democratic hack, you are in a charitable mood today.

In stead of challenging Ryan's math and arguments, you accepted them at face value!

Me thinks, Ryan is spot on in his analysis and you are struggling to come up with credible rebuttals to his arguments.

When Medicare was passed in the 1960s, CBO had scored the cost of that boondoggle then. Compare those projections with today's Medicare reality and see how off those rosy projections were!

Washington should really be focussing on the real problems with current health care system: containing runaway cost of delivery, breaking insurance monopoly on local markets, tort reforms, eliminating unequal tax treatments among many insurance plans so the true cost of coverage is the same for individual small business owners as well as big corporations.

Instead, the fools in Washington are hell bent on creating another boondoggle; medicare for all.

Posted by: vatodio | March 2, 2010 2:21 AM | Report abuse

Ezra, outstanding job -- writing like this is more insightful and detailed than one expects to find at major newspapers in the 21st century.

Posted by: vvf2 | March 2, 2010 2:47 AM | Report abuse

This is not a cost reform bill. This massive expensive horrific move is a government takeover that no one wants. Let us get the cost figures from the CBO. I will be willing to bet the true cost is going to be two trillion plus. Also to take out major costs to be pushed through in other bills just to lower projected costs is still a cost. You cannot fix health care costs by spending more money. No one is buying that nonsense. Our national debt is now 11.4 trillion under Obama. This is serious and dangerous. That sure does not make me want to follow this piper into the sea. We are drowning folks and this stupid bill is the wrong bill for the wrong time for the wrong reason. These deaf arrogant politicians need to go home and find some of those phony jobs from Stimulus I.

Posted by: greatgran1 | March 2, 2010 5:20 AM | Report abuse

Ezra,

Why don't you use your influence as a journalist to ask Ryan what he thinks of double accounting for any program, Republican or Democrat? Frankly, Ryan is being vastly more honest than you or any one else on the hill about the real costs of this bill.

Steve

Posted by: FatTriplet3 | March 2, 2010 8:10 AM | Report abuse

Fair analysis, but based on the utopian belief that government spending will follow the model. Never has / never will.

Health care costs will never come down as long as people perceive they are spending other people's money. Outside catastrophic illness, an individual needs to be in charge of their own pot of money and be responsible for what they spend. This will force them to make wiser choices.

Posted by: gaphound | March 2, 2010 8:11 AM | Report abuse

Has economic experts considered the effect on the USA Economy of sucking billions of dollars disposable income of Americans who will suddenly be forced to buy the most expensive comprehensive insurance, made more expensive by new government regulations restricting how insurance companies conduct their business.

Such a mandate, and movement of dollars from disposable income into the government-mandated purchase of insurance would have dramatic recessionary effects if the economy were strong. In its current state, the movement might likely trigger calamity and crisis.

Posted by: FastEddieO007 | March 2, 2010 8:58 AM | Report abuse

The math listed in your blog Ezra does not add up. Ryan is correct, there is no way that government will cover the cost of the entitlement no matter how many accounting schemes are used. I believe that a health care bill is sorely needed but it is one that needs honest figures. Therefore I am sad to say, Ryan provided that language whereas this post simply provided excuses. I cannot fault you for trying Ezra but government revenues will not account for expenses issued, sooner or later someone (likely my child) will have to pay for this.

Posted by: mikes777 | March 2, 2010 8:59 AM | Report abuse

I enjoy a thoughtful and coherent discussion, but Ezra Klein is missing the bigger political and economic picture. The days of centralized government authority and massive ponzi scheme social programs is ending. We are witnessing the march of history. The economy is going through a historic change, and governments as always will have to follow that change. The new economy and new governments will be characterized by decentralization, small innovative businesses that take advantage of the digital age, and increased individual liberty and worldwide social mobility.

Even if healthcare reform is passed by congress this year, it will never come to fruition because the changing economy will not allow it. It literally cannot happen. The economy will trump the democrats will.

Posted by: rwyoung | March 2, 2010 9:17 AM | Report abuse

By the time my children our of age, the years of recurring deficits will add up to a mountain too high to be paid back....this is structural deficits that eat up a higher percentage of GDP...once the debt itself starts consuming more than 100%, USA's freedom will yield to the tyrannical powers of Venezuela's Chavez, Iran's Khameni, and Russia's Putin.

Posted by: FastEddieO007 | March 2, 2010 9:18 AM | Report abuse

What exactly is responsible for bending the cost curve down? Other than the (ever weakening) excise tax, I've got nothing.

Health reform increases aggregate demand for health care, and increases cost insulation for consumers. I'd imagine that an increase in the number of patients without an increase in the availability of providers puts the providers in a good negotiating position vis-a-vis insurance companies.

The MA health care reform doesn't seem to be containing costs either - this article from the globe reports that premiums would rise by 10% on average this year.
http://www.boston.com/business/healthcare/articles/2009/09/16/health_insurers_plan_10_rise_in_rates/

Politically, implementing cost controls is very difficult. The experience we had recently over the new mammogram recommendations - a recommendation to reduce mammograms based entirely on modest benefits, not saving money - suggests that using comparative effectiveness review to avoid paying for treatments not deemed cost effective is going to be a political football. Even if some cost controls are put into place, the history of cost controls suggests that the controls will either be ineffective or reduce access to health services.

Even if somewhat controlled, costs will continue to rise in excess of inflation. That will force subsidies up, increasing the implicit marginal tax of subsidy withdrawal, and increase explict taxes needed to pay for the subsidies.

Posted by: justin84 | March 2, 2010 9:18 AM | Report abuse

I believe Obama & Pelosi will not insititute death panels in this healthcare bill, BUT THE PROBLEM IS THEY ARE PROVIDING THE FEDERAL GOVERNMENT THE AUTHORITY & PRECEDENCE FOR DOING SO.

http://www.bloomberg.com/apps/news?pid=20601070&sid=aGrKbfWkzTqc

Posted by: FastEddieO007 | March 2, 2010 9:21 AM | Report abuse

justin,

you're absolutely right. 90% of cost controls have been stripped from this to make this legislation politically somewhat paletable. Its basically just an expansion of coverage at this point at a time when we can't afford it. They should do more.

Its also determined by where they set their baseline. If you say a car in 10 years will cost $150,000 and it actually costs $40,000 well then you've reduced that defecit haven't you. Doesn't mean its an honest assessment though.

Anyone can make statistics dance to your own tune depending on which way you lean, left or right.

Posted by: visionbrkr | March 2, 2010 9:24 AM | Report abuse

The ultimate smoke and mirror is the move by Democrats to say "WE NEED TO REDUCE THE SPIRALING COST OF HEALTHCARE" and in the next breath insist "WE MUST PROVIDE HEALTHCARE TO THE 30 MILLION WHO ARE UNINSURED".

These aren't exactly contradicting goals----BUT THE PRIORITY NEEDS TO BE REDUCING SPIRALING HEALTHCARE COSTS! If Obama and Pelosi could prove to people they are doing this, they'd have no issue with the second part. The problem is Obama and Pelosi are rigid ideologues who decided what they were going to do long before getting into office...all you have to do is look for the Jacob Hacker videos on YouTube.

Posted by: FastEddieO007 | March 2, 2010 9:27 AM | Report abuse

I'm not sure how you wouldn't say its double counting when Obama takes 500 Billion out of Medicare, a program that is broke right now, but you don't use it to shore the program up, instead you spend it on a new Obamacare program. At the same time you take that 500 Billiion and count it as reducing the budget deficit because you're not spending it on Medicare anymore. Must be a type of government accounting. Maybe we could call it Obamacounting. Also, Obama and the Democrats have endlessly gone on and on about how Obamacare is comphrehensive healthcare system reform, so how could you not count the Doc Fix as a cost of Obamacare. It's supposed to fix everything right?

Posted by: RobT1 | March 2, 2010 9:42 AM | Report abuse

Here is a challenge Ezra. If Obamacare passes, I'll bet you $1000 that it raises the deficit over 10 years rather than lowers it as Obama and the Dems claim.

You have shillled for Obama and the Dems on Health Care since day one, and now you give us this drivel saying the CLAIM by CBO that the deficit will fall is true. How's about putting your money where your big-fat Obama cheerleading mouth is.

Posted by: hartwr1 | March 2, 2010 9:44 AM | Report abuse

Here is a challenge Ezra. If Obamacare passes, I'll bet you $1000 that it raises the deficit over 10 years rather than lowers it as Obama and the Dems claim.


ME TOO!!! I want a piece of that action!!

Posted by: FastEddieO007 | March 2, 2010 9:56 AM | Report abuse

These comments provide a great insight into the state of political debate right now. Klein's response to Ryan is that the CBO's numbers show a small, but increasing, reduction in the deficit due to the HCR bill, a mild reduction in the growth rate for costs, and that the doc fix (like paying for the DOE, occupation of Iraq, highways, etc.) is a set cost to be paid irrespective of the HCR bill.

The conservative response here is largely "lalala we don't believe you." Well lets see some evidence. I'll readily concede that CBO scores are frequently off target, but that's because they're guesses at a complex economy with lots of other factors at play. The difficulty of accurately predicting an outcome is no reason to not act at all. The fact is that our best guess is that the bill will have a small positive effect on the government's finances while also doing a great deal to protect people from medical risk and its accompanying financial risk.

If people want to whine and cry about cost control, then they should lobby the Republicans to sign on to a compromise. There's no reason the modifications to the Senate bill made in reconciliation can't include a beefier excise tax, more widespread delivery system reforms, a repeal of the ban on Medicare negotiating drug prices, etc., if the Republicans are willing to put their votes where their mouths are. But enough of this nihilistic gut reaction against the very idea of change.

Posted by: etdean1 | March 2, 2010 10:19 AM | Report abuse

Splitting SGR reform from the overall reform bill was/is intellectually dishonest, especially since the majority of the CBO projections on cost savings of this bill take into account the 21% cuts in reimbursement providers will endure.

If you add SGR reform to the bill, the overall cost would blow by $1 trillion.

Posted by: gopoohgo | March 2, 2010 10:36 AM | Report abuse

The Obama administration gets favorable scores from the CBO in the same way Alan Dershowitz gets horrible criminals off of death row----a shrewd if not cynical manipulation of the system through loopholes and technicalities.

Posted by: FastEddieO007 | March 2, 2010 10:40 AM | Report abuse

We are running huge deficits and we have multi-trillion dollar unfunded liabilities in Medicare, Medicaid, and Social Security. Any new money spent on a new entitlement is the true cost. By raising taxes that get passed on to consumers, saying that we are going to cut doctors pay by billions even though we never do it, by cutting Medicare to be used for this new entitlement as if we never have to pay future benefits, its all double counting. All of these cost cutting measures don't even shore up the current system. This is why the American people aren't buying it. It's a new entitlement stacked on top of current underfunded entitlements that we cannot pay for. Mr. Klein, you know better. I don't mind having a debate on whether we should spend the money to insure 30M more people, but don't try to sell me on a free lunch. I don't believe in fairy tales.

Posted by: mnright | March 2, 2010 10:41 AM | Report abuse

to etdean1,

It is not simply a matter of "lalala, we don't believe you". This is what the cavalcade of liberals who don't understand why people want government action but don't want government spending.

People of a conservative background, or just people of a more independent background see government inefficiencies and failures as systematic. They want solutions, but cannot grasp a system that counts on government to manage things, simply because whatever side is in power they will manage myopically.

For example, with this bill, we see that cost cutting measures include a congressional commission on the costs of health care and savings extending from emergency costs averted by covering more individuals.

The first is plainly dubious. No one outside the most committed to government regulation of health care could possibly expect a commission to make politically difficult decisions restricting actual health care costs. They would either have to make it known that they are squeezing ultimate consumers (ie voters) or squeezing insurance and care providers. They won't do anything.

The second does have merit. Feasibly we should see less cost diverted to expensive emergency care. This, however, makes a great deal of assumptions about consumer trends in consuming health care.

Here are some factors that I don't think these assumptions actually make.

First: I would argue that, while not absolute, a great deal of those that are uninsured are less concerned about health care in the first place. Health issues, especially catastrophic ones are usually lifestyle issues, and not health care issues. I do not believe that health coverage will alter many lifestyles and cause any significant increase in healthiness.

Secondly, coverage is extended at lower cost to the consumer of the healthcare. It will probably reach a point where the consumer of healthcare pays for less than 10% of their care. Amongst those who do take health care seriously, they are likely already covered, and will therefore be incentivized to seek more care.

So basically, the argument that it will cut costs because of preventative care assumes rational people operating on equal priorities.

Ultimately, conservative skeptics (note that I don't want to say critics because often the most outspoken are outright liars) understand a couple of basic items without justification: 1) there is no such thing as a free lunch, and 2) people are individuals with individual wants, and you only control behavior by addressing individual values.

Therefore, any proposal like this is going to be met with a basic underlying skepticism. In this case, I would say the skepticism is justified.

Posted by: BradPotts | March 2, 2010 11:16 AM | Report abuse

No one's saying it's a free lunch. What is being said is that the HCR bill raises its own funding, more than enough, so it's fully paid for. No one's saying that this bill is the end of the line. It is not now, nor was it ever, all that was needed to fix Medicare. But it helps some. If you want costs cut more, then say what you want. Don't just parrot the meaningless phrases "tort reform" and "sell across state lines."

Posted by: etdean1 | March 2, 2010 11:29 AM | Report abuse

>>

No one in their right mind can believe that a Washington "takeover" (yes! it really is a takeover) of our health care system will be efficient at a time when our national debt is edging toward bankrupcy. Have you seen their track record ?!?!

Robert Reischauer is quoted, "Were I in Congress and asked to vote on this I'd vote in favor." The bill isn't perfect, he continued, "but it at least has the prospect for creating a platform over which more significant and far-reaching cost containment can be enacted."

RIGHT! Government will be sure to contain those costs in the future!

<<

Posted by: CyKick | March 2, 2010 11:31 AM | Report abuse

Bradpotts, thanks for making a thoughtful case. I completely agree that any and all government proposal (to do anything, really) should be met with healthy skepticism as to whether the government can actually help, and if so, whether it's doing so in the best manner possible. Skepticism alone, however, is not an argument. When HCR proponents pull out research papers, CBO scores, and data compiled over 50 years of study in the field, now it's time to either refute those findings or agree with them.

In a field like health care, we've seen by the state of the present market that the current structure is unsustainable. That's undeniable. Since individuals aren't acting to fix the twin problems of lack of coverage and rising costs, the only alternative is government action. To address your first point, I think you're making a circular argument that's been addressed before on this blog. If you don't think that Congress will adhere to MedPAC's up-or-down recommendations, then you don't think that Congress will ever do anything to control costs, and we're doomed no matter what. It's nihilist. I guess the only alternative is the complete abolition of Medicare. I think there's good reason to believe that a technocratic commission with an explicit mission to improve efficiency and reduce unnecessary costs is a good one, and the base closing commission example shows that such a commission can work. More explanation here (http://voices.washingtonpost.com/ezra-klein/2009/06/breaking_how_the_white_house_p.html). At least give the stronger MedPAC a try. Same for the pilot delivery reforms that have a lot of potential, but are so uncertain that the CBO didn't even factor them in.

As to your second point, preventative care isn't really a factor in the cost cutting, since people use up more money on health care when they live longer. The bill directly addresses your notion of dealing with individuals by (a) creating an actual marketplace for individuals to purchase insurance and (b) using the excise tax to eat away and the distortionary exclusion of employer provided insurance from taxable income. And lets be honest, I don't think it's a stretch to say that if you make preventative care cheaper, more people will take advantage of it.

So lets hear the alternative. If you really think that the government will never cut any spending on health care, what should we do? Why should we have a system where individuals that have a pre-existing condition either obtain no coverage at all, or pay at unaffordable rates?

Posted by: etdean1 | March 2, 2010 11:51 AM | Report abuse

etdean1 says,

"If people want to whine and cry about cost control, then they should lobby the Republicans to sign on to a compromise. There's no reason the modifications to the Senate bill made in reconciliation can't include a beefier excise tax, more widespread delivery system reforms, a repeal of the ban on Medicare negotiating drug prices, etc., if the Republicans are willing to put their votes where their mouths are. But enough of this nihilistic gut reaction against the very idea of change."

This is completely correct and spotlights the hypocrisy of the Republican argument (that Republicans share the same goals for health care and simply want to "start over" and reform the system in a more fiscally responsible way).

As etdean1 points out, adding taxes and cost control mechanisms would address the Republiican fiscal arguments, but reasonable taxation and pricing controls to achieve deficit neutrality are something no Republican will ever support, because history shows tax cutting is all important and deficits don't matter when Republicans take power. So starting over leads nowhere, and nowhere is truly the Republicans preferred destination with HCR in 2010.

I continue to think that the Republican obstruction contains ironies in the long term. If HCR fails this year, the problems in the private system will only compound over time. The public will demand a more radical solution, like "Medicare for All," and the Democrats will find that sort of reform much easier to explain and to sell, after having unsuccessfully pushed for moderate but complex reforms that preserve the private-insurance based system.

This year's effort truly may be the last opportunity to reform health care in a way that leaves private insurers and competitive private market mechanisms relatively intact, but the Republicans' short-sighted obstructionist strategy will not allow them to become a partner in saving the private system at the 11th hour.

Nice job, Ezra, in illuminating the Ryan vs. CBO methodologies.

Posted by: Patrick_M | March 2, 2010 11:51 AM | Report abuse

Use Senate reconciliation and expand Medicare via the Senate’s buy-in provisions. The CBO has already signed off on this as a means of saving money.

More importantly, if more Americans can do a buy-in with Medicare, it creates more cost control (because there’s a genuine “public option” competitor).

It also helps to solve the problems of pre-existing conditions, because Medicare does not deny coverage on this basis.

Allowing a Medicare buy-in to Americans under 65 would give people a genuine alternative to private insurance and thereby render the pre-existing question moot.

It would also lower Medicare costs by expanding the risk pool of patients (the great bulk of medical expenses are accounted for by a small number of people, mostly the elderly, requiring very expensive treatment).

Posted by: JourneyHomeBurke | March 2, 2010 12:29 PM | Report abuse

etdean,

It is not that I am taking a circular or fatalistic view of cutting costs. I am not saying that congress will never accomplish anything so it shouldn't do anything. I am saying that the numbers appear to rely on congress to actually do something. That is an assumption only politicians would feel comfortable with. Typical arguments so far have been spend now, cut back later, but that has simply never happened. By all means, have a commission, but take them to be a possible exception to the rule, not as an actual cost cutter. To count on them for much more is like buying lottery tickets with rent money.

I know of the marketplace idea. I don't really understand how it will work, or what prevented such alliances from springing up without government help. Perhaps you could explain it to me?

I also fail to see what the excise tax would do. Is it accepted that these "Cadillac" policies are actually wasteful? If you are adding the tax to undo the distortions of a previous tax, wouldn't the more efficient way to be removing the original distortion?

As for me, I don't think you can approach any resolution for rising health care costs without some combination of a public option and an attempt to change the way health insurance is viewed. Right now health insurance is treated like a prepaid service plan. Both sides treated it that way in the health care summit, deal, with Obama even saying that real health care insurance is a prepaid service, not an actual insurance plan. I think a combination of medical savings accounts and catastrophic coverage plans are the best way to limit costs.

This would better tie costs to actual consumption, while providing a public alternative to the corporate health cartel we have established to maintain our health care systems in this country.

Posted by: BradPotts | March 2, 2010 12:34 PM | Report abuse

"The bill might cost $2.3 trillion, but it either raises or saves $2.95 trillion, for a net deficit impact of negative $650 billion."

In other words, we can add 30 million people to the Medicare roles AND save $650 Billion doing so.

Such a deal!

Sorry, but that is completely counter-intuitive, and completely counter-historical as well. Budget estimates are ALWAYS low-ball. The actual costs of programs ALWAYS goes up.

No one with a lick of sense trusts that this health care bill will work out the way they say it will. I'm surprised that Mr. Klein, who seems to be an otherwise smart fellow, hasn't figured that out yet.

Posted by: dmarney | March 2, 2010 12:40 PM | Report abuse

It is also important to point out that, since health care reform is being portrayed as being absolutely essential because of our insane healthcare spending. We spend far more than the rest of the world, and we cannot sustain it.

Yet, the study Drum references by the Medicare Actuary estimates the relative costs of the projections. Basically, we will be spending more on healthcare if this passes than we would be if it didn't. The additional coverage is great, and all, but what good is additional coverage if we sign up for entitlements that we have already stated we cannot afford?

Posted by: BradPotts | March 2, 2010 12:59 PM | Report abuse

Bradpotts, I agree with your last two paragraphs. What we really need to do is change the way that we pay for health care services. Since the Congress has determined that any radical reform would be too much, we're left with bits and pieces.

Asf or the exchanges, I couldn't find a link right now from this blog explaining, so I'll hope another commenter can provide that. Generally, the concept of the exchange is to create a market (the current legislation has default state markets, with the option to opt into a national market) where insurers can sell standardized insurance plans to customers based on a set of federal regulations, I believe managed by OMB. With standardized policies offered to all, and some degree of risk adjustment, insurers will have to compete based on cost and quality, not just to see who can get the healthiest customers, to profit.

The excise tax is just a half (quarter, tenth?) measure, mostly because when people have tax loopholes, they fight to keep them. The current system is distorted in that health insurance purchased by dollars from your employer is tax free, whereas health insurance purchased by you on your own is done with post-tax wages. That discourages labor mobility and encourages people to take more expensive employer based plans than they otherwise would. The excise tax is an attempt to limit the top value of those plans. More here: http://voices.washingtonpost.com/ezra-klein/2010/01/the_mostly_unchanged_excise_ta.html

As for the cost cutting, I think there's a good chance that Congress will kick the can down the road on cost cutting, but we have to try. No matter what policy is used to tackle Medicare costs, it'll require the system to not pay for some things, and pay less for others. I can't see a better way than MedPAC to do so.

Posted by: etdean1 | March 2, 2010 1:02 PM | Report abuse

Interesting comments Mr. Klein, but your arguments don't get past the fact that our country is broke and can't afford any more entitlement programs. It makes NO sense whatsoever to take money from an existing entitlement program (Medicare) that will shortly be bankrupt and fund another entitlement program that will NEVER live up to it's vastly underestimated CBO cost estimates.

Given our country has no money and is in a recession, we can't afford this entitlement nonsense. You can argue that providing everyone with a new healthcare entitlement is a nice "moral idea" worth pursuing if we were able to do so financially. But we are NOT. How moral will this entitlement decision be when the entire country goes bankrupt? Is it better to have 30 million people with no healthcare entitlement, or 100+ million people that won't get Social Security, Medicare, Medicaid, or the new Healthcare entitlement because the government can't cover the 100+ Trillion dollar IOUs?

Adding a new entitlement onto the backs of taxpayers is the LAST THING AMERICA NEEDS RIGHT NOW! Get a grip Obama, Congress, and Ezra Klein.

Posted by: usagoingbroke | March 2, 2010 1:31 PM | Report abuse

Ezra, you can pontificate all you want, but there are two points of reality you need to accept:

1. NO "big" govt program has come in anywhere near what the original cost projections were.
2. Voters implicitly understand and believe point #1.

Obamacare is a massive new entitlement program that focuses on expanded coverage and pays only lip service to controlling costs. The only people in favor of the Bill at this point are the uninsured, ideological Liberals, and Dem party hacks.

Posted by: JohnR22 | March 2, 2010 1:31 PM | Report abuse

You had me going until this part:

>The SGR problem predates health-care reform and exists irrespective of health-care reform's fate. Attempts to lash the two together are nonsensical.

Bringing up the SGR problem makes perfect sense. If Obamacare doesn't deal with SGR, yet continues to assume Congress will make those cuts (which we'll apparently never have the fortitude to do) it is ABSOLUTELY fair to add those costs to the overall balance sheet.

I don't understand why you'd call that misleading or nonsensical. Regardless of who's fault it is, it is still a cost that can't be ignored.

Also -- and I thought this was telling in your reporting -- you called it a Republican bill. If I remember correctly, that was part of the 1997 budget deal which was signed by President Clinton and was one of the closest things to a major bipartisan effort Congress has done in the last 20 years.

Posted by: suomi34 | March 2, 2010 2:29 PM | Report abuse

JohnR22, Even the uninsured need to be analyzed as separate interests. At least half of the uninsured group are uninsured because they choose to be. They have made the rational economic decision not to participate in an insurance risk pool that requires them to pay a premium far in excess of their actuarial risk. It is this younger, relatively healthy group that Pelosi/Obama need in the pool to reduce the average costs of others (not the total costs, but the average). They will accomplish this through coersion by mandating participation. They cannot eliminate the pre-existing condition exclusion they love to demagogue without forcing everyone into the pool, even those who don't want to swim, can't swim, or who we know will crap in the pool. It is nothing more than forced redistribution by the federal government, done, of course, for your own good.

But Ezra doesn't think you know the difference bewteen a turd and a Snickers bar. Happy swimming.

Posted by: BarrySanders20 | March 2, 2010 2:34 PM | Report abuse

The best inside the beltway look at this article can be found in the very last sentence.

"Were I in Congress and asked to vote on this," he replied, "I'd vote in favor." The bill isn't perfect, he continued, "but it at least has the prospect for creating a platform over which more significant and far-reaching cost containment can be enacted."

keywords....'prospect'....'creating a platform'...'can be enacted (at a later date)

interpretation...spend the 2.6 trillion now and don't worry about the costs!

Does any honest observer really believe this stuff? Covering 30 million more people will cost a bundle, and we can't afford that right now! First, figure out how to make healthcare more efficient and affordable. Once that is accomplished, we can begin to figure out how to pay for adding the additional milliions.

Posted by: tennisman874 | March 2, 2010 3:11 PM | Report abuse

To say that the bill reduces the deficit because it "increases revenues" is silly. For those of you reading this who don't pay income taxes, "increases revenues" means "increases TAXES." So, the fact that the CBO assumes higher tax collections in 2019 doesn't mean that health care welfare bill is affordable. Ryan is correct: the true cost (as someone who pays bills knows) is $2,300,000,000,000 over a 10 year period. If taxes come in short of the CBO model (like, for example if there is ever a recession during a 10 year period- a given), then the entitlement just adds to the deficit, or forces increased taxes, or reduces care. Hope all you young kids enjoy paying for this whopper being foisted on you by the boomer-entitlement generation. Of course, you can take revenge by getting control of Congress, and then limiting care. Something will definitely have to give, as there is NO incentive to control costs, either today, or in the bill. Don't ask me, ask Warren Buffet, notable Democratic billionaire. Good to see the WaPo going into overdrive to shove this dog down our throats.

Posted by: indacenter | March 2, 2010 4:22 PM | Report abuse

BarrySanders20, you don't want to get in the pool? Fine, but don't come to my emergency room when you have a heart attack (unless you have the deep pockets to pay for it, of course).

Posted by: mitbruin | March 2, 2010 4:27 PM | Report abuse

As far as I can tell, this is utter nonsense. The CBO says this about the costs of the House bill: "In sum, relative to current law, the proposal would probably generate substantial increases in federal budget deficits during the decade beyond the current 10-year budget window." Where does Klein get his statement that the second decade deficits are decreased? There's no source. As this is the key to Klein's argument, this blog post is downright wrong until proven otherwise.

Posted by: Dellis2 | March 2, 2010 4:30 PM | Report abuse

Well this is what I call an inversion of the old saw: Ezra Klein manages to praise with faint damning. And the result is that Paul Ryan's entire critique becomes a definitive commentary on the principal failing of Obamacare. It will not help control costs. It will attempt to pay for its progressive dream of giving free or subsidized care to 20 or 40 million people through higher taxes, but since those taxes will be self-defeating (i.e., they will curb the very activities and behaviors that engender them), they will fall short.

A giant deficit bomb. And now Klein wants to quibble about the size of that bomb or negate it altogether. Problem is, we have no room to give. We're deep in a hole on every entitlement, and progressives can muster at best a defense of "It's not as bad as it seems" for Medicare, Medicaid and Social Security. Great. We're drowning in debt, so what's another few thousand gallons of water over the top, I guess.

Klein: "Though it's true that the trust fund will have to be repaid either through spending cuts or tax increases, the trust fund will be repaid. Otherwise, the government defaults and everything goes to hell." Now you're getting it. Note the three options: (1) spending cuts -- which the liberals vilify as cruel and inhuman in all cases save defense, (2) tax increases -- exactly what the struggling economy needs to further choke growth or (3) everything goes to hell. Guess which option Ezra Klein favors? And guess which option we don't choose, but chooses us, if we keep thinking it's okay to cook the nation's books in the belief that nothing bad could ever happen as the result of phony accounting or trending (insert housing collapse here).

Yes, the analogy of repairing your roof is apt. And one thing you certainly don't do if the roof needs work is break ground on a new swimming pool, or throw a party for 30 million people and hope their presence lowers the cost of the repair.

Posted by: Imperfections | March 2, 2010 4:37 PM | Report abuse

I believe in Ryan's roof analogy. If I pay $20,000 for a new roof or subtract $20,000 from the value of my home for the roof, I have $20,000 less. The $20,000 is not part of cost of my new home but it either made me drop my price range by $20,000 or have $20,000 less equity. It is a negative to my net worth. I also have two other houses, my Medicare house and my Social Security house. Both need dramatic repairs that are way beyond my financial means. It seems to me that I need to get my financial houses in order!

Posted by: JCG1 | March 2, 2010 4:42 PM | Report abuse

Let's back up a minute. What do we want out of a health care plan.
1. We'd like everyone covered.
2. Plan should be as inexpensive to administer as possible.
3. Must allow for competition to provide adequete or better coverage.
4. Must be fiscally resposible.
Today everyone who needs it gets care, the costs are borne by all of us as a society. But there is little control, no incentive to lower cost, and costs are borne dis-proportionetly.
A "fair" system would; 1.Include everyone (all ages), 2. Be paid for by those using the service and all would pay the same price (total health care costs divided by total population),paid per capita, 3. Include incentives to lower costs.
I don't think this would take a 2800 page Bill.
"Everyone" means the plan would be "Universal" no opt outs. "Fiscally sound" means all Health related costs, and only Health related costs are covered and paid by collected premiums and/or a fee at time of service. A fee at time of service would incentivise cost saving and would allow for a lower premium. This also means "private plans" would be eliminated which would free up a huge amount of capital for corporations to pay higher wages, hire additional workers, and lower prices, making the U.S. more competitive in world markets.
To make the plans more affordable we could have several plans, much like Part B Medicare, each with a premium level and covered services. Insurance companies could offer these plans, across State lines, at whatever price they felt competitive. This again would tend to drive prices down.
Premiums could be deducted from paycheck, SS payment, SSI benefit , etc. sent to Federal Govt. and be disbursed back to the Insurance Co. per SS#. These mechanisms are already in place within industry and for Medicare parts B, C, D. Additional incentives could be applied for efficient handling, efficient Medical record keeping, reduction of unneeded Tests, (Tort Reform?), etc.
A Bill written with these common sense approaches would not cost the Govt. anything additional, (all costs borne by the recipients), hence it would be "Fiscally sound", would cover all.
I suspect some would say "the fly in the ointment is that the premium for such a plan would be prohibitivly expensive for some, perhaps for most". But that would mean we can't afford "fairly" what we are currently providing. If that were the case and the only way to get the additional funds needed is to tax "unfairly" then we could apply a Medical "surtax" on the wealthy, however that is defined. At least the "surtax" would be seperate and visible and we might feel some responsibility to lower or eliminate the added burden on others.

Posted by: rariadnbnc | March 2, 2010 4:49 PM | Report abuse

Ezra,

Can you sleep at night after giving your readers only 1/2 of the facts?

The simple truth is that all the Liberals & Democrats KNOW that the Medicare savings used to pay for this in this bill are completely BOGUS.

The Democrats admitted this when they tried to pass the permanent DOC FIX in the middle of the night. In effect this was an attempt to break the bill into 2 pieces so that the second part, the health care takeover, was held under $750 Billion dollars (since they have no intent on making the Medicare cuts built into this bill).

This is the fundamental dishonesty of Liberals and Democrats; America Rejects their correct leadership!

Posted by: ELFopportunity | March 2, 2010 4:59 PM | Report abuse

Finally someone has responded to Paul Ryan! Thanks you so much Ezra. I have been commenting on these very points on real clear politics posting of the video. While I respect Paul Ryan's lack of utter panic when it comes to health care (in contrast with nearly everyone else in the Republican party), I do find his misuse of numbers to produce "facts" to be just as dangerous. There are literally thousands of people who are now in the cult of Ryan, because they believe he taught the president a lesson by using "facts."

It is also not true that the bill masks costs by delaying benefits and taxing early. The bill provides small business tax credits from the first year, and the excise tax (the main revenue source) kicks in at the same time as the subsidies (the main cost of the bill).

Posted by: yonimorse | March 2, 2010 5:19 PM | Report abuse

"Let's back up a minute. What do we want out of a health care plan.
1. We'd like everyone covered.
2. Plan should be as inexpensive to administer as possible.
3. Must allow for competition to provide adequete or better coverage.
4. Must be fiscally resposible."

- - - - -

Great list! Let's stop right there. Here's my version:

1. I'd like the government to get out of the business of providing health care and health insurance. I don't like it that my employer gets to pick my insurance, much less my government.

2. I'd like the government to stop meddling in the form of tax breaks and special deals, so insurance providers are free to compete head-to-head on the basis of value.

3. I'd like the government to be an independent referee only.

4. I'd like the government to encourage the formation of charitable health trusts for people who are too poor or too disabled to afford insurance. Charity should be as personal as possible.

Posted by: dmarney | March 2, 2010 5:36 PM | Report abuse

What a bunch of socialist propaganda doublespeak. Little lefty Ezra sure can spin some lies.

Posted by: kr1839 | March 2, 2010 5:44 PM | Report abuse

I won't argue that politicians try to tilt their arguments for the greatest sound bite effect. However, you (and the CBO) are missing the underlying fundamental problem. Whether you have single payer government insurance or our company paid/govn't mandated 3rd party payer system, the fundamental price control mechanism is missing. Don't get lost in CBO numbers. The underlying assumptions used to predict efficiency are simply bad guesses. You can regulate, but you will not experience any cost reduction until we apply proper market forces to the problem.

Posted by: nonlocal1 | March 2, 2010 5:45 PM | Report abuse

Let us see if you can you have to be a CPA like me to figure this out. I really don't think so lets try. We have 30 million people who are uninsured. Do they go completely without treatment and cost the system nothing. No, they cost us plenty because they go the emergency room when they are sick become what we in accounting call bad debt. Does the bad debt just go away, of course not it goes into hospital overhead. The overhead is the reason why everything cost so much money at the hospital. Who pays for that? Your insurance company or you if your a private payer. Thus, you are going to pay for these 30million people either through taxes or higher insurance. If you believe preventive care can reduce health cost then a government plan will bend the cost curve.

Posted by: bradcpa | March 2, 2010 5:52 PM | Report abuse

The government has a poor track record for saving us money by running things.

Frankly, this piece is just not believable.

Posted by: drkiernan1 | March 2, 2010 6:51 PM | Report abuse

"Though it's true that the trust fund will have to be repaid either through spending cuts or tax increases, the trust fund will be repaid. Otherwise, the government defaults and everything goes to hell. This assumption that the government will pays its debts is not only necessary for accounting purposes but also for, say, investing in Treasury bonds, or in the stock market, or any other facet of American economic life that presumes the continued fiscal soundness of the American government."

---

Actually, US has defaulted on its debt before (in 1933): http://www.roubini.com/globalmacro-monitor/255267/was_there_ever_a_default_on_us_treasury_debt

Posted by: toki9 | March 2, 2010 7:42 PM | Report abuse

Klein's entire argument is predicated on his belief that "the revenues and savings grow much faster than the spending," although no one believes that in view of the past record of government programs. That has never happened and will not under this program. Period. To argue otherwise is folly.

The proponents of government-driven health care rationalize everything as does Klein, who preaches to an Amen Chorus of posters on this blog. His faulty understanding of basic accounting does not pass muster with anyone who has ever taken basic business courses, much less worked in public policy. Unless they are simply willing to suspend disbelief.

Ideology trumps common sense, history, and experience for Klein, Obama, and the so-called "progressives." They could all understand this material if they wanted to. They don't. They want what they want regardless of the damage.

Posted by: parkbench | March 2, 2010 7:45 PM | Report abuse

In 2008 Richard Fisher of the Dallas Fed claimed that the unfunded liability represented by Social Security and Medicare benefits amount to $99 trillion (http://www.dallasfed.org/news/speeches/fisher/2008/fs080528.cfm). In other words, the government was already staring at a hole of $99 trillion in 2008 (Before the current recession fully hit).

That $99 trillion number probably varies depending on assumptions, but given that our GDP is about $14 trillion, it paints a frightening picture.

Posted by: toki9 | March 2, 2010 8:01 PM | Report abuse

Mr. Klein, you stated "The bill might cost $2.3 trillion, but it either raises or saves $2.95 trillion." I am curious as to how much is "raised" and how much is "saved".

Remember, one of the primary goals is to reduce health care cost, NOT reduce the deficit. In other words, "raising" money (i.e. taxes) just shifts the costs to taxpayers and would not have the effect of reducing costs. "Savings" are the actual health costs savings.

That, in essence, is the main critique of the Obama/Congressional plans - regardless of their impact on US govt deficit, there is serious doubt as to whether it actually reduces the percentage of US GDP spoent on health care.

As for the "savings", are these real savings, or savings that rely on further action by Congress?

Thanks,
Henry

Posted by: harrassee | March 2, 2010 8:21 PM | Report abuse

Mr. Klein's central thrust is to note that many of the ancillary spending issues should not be yoked to the bill at hand.

A simple retort is in order: whether yoked or not, it's still a wagon that the taxpayers will have to pull. The "doc fix" will still cost us more. The trust fund depletion will still cost us more. And, unless you are really of the feverish mindset that you can cut $500 from Medicare without cutting services, then Medicare will also cost us more (unless Washington power brokers grow a spine, that is).

If HCR is going to be used to obscure the other, even harder, aspects of federal budget reform, then it too is a red herring that ought to be exposed. In the end, it's all about one thing only: How much does the government want from we, the people?

Posted by: fabio9000d | March 2, 2010 8:28 PM | Report abuse

"The only people in favor of the Bill at this point are the uninsured, ideological Liberals, and Dem party hacks."

And the uninsured, liberals, and Democrats don't matter at all, of course.

Posted by: Patrick_M | March 2, 2010 8:29 PM | Report abuse

If anyone is a fan of Paul Ryan on Facebook. He posted the rebuttal letter that was sent to Ezra. Paul Ryan ftw.

Posted by: painritual | March 2, 2010 8:29 PM | Report abuse

Another important point is in order vis-a-vis the Kevin Drum argument and the cost curve: the actuary's figures were based on Reid's bill, not Obama's. There are significant fiscal differences. As we know, Obama does not yet have a bill in the hopper, and therefore we have no CBO score or actuarial estimate.

Posted by: fabio9000d | March 2, 2010 8:36 PM | Report abuse

Yet another caveat in the Klein/Drum analysis on the cost curve: the actuary's report assumes that the addition of several million enrollees to Medicaid will lead to some lowered costs due to the lower payouts to Medicaid providers.

What if fewer providers accept Medicaid, however? Then government would have to (1) raise its payments; (2) incentivize acceptance of Medicaid enrollees in some other way; (3) or simply require (some/all) providers to accept Medicaid enrollees.

As providers are already dropping Medicaid enrollees due to the lower payments, it seems reasonable to at least question whether this aspect of the actuary's report is something upon which federal policy should rely.

Posted by: fabio9000d | March 2, 2010 8:45 PM | Report abuse

All this talk of numbers is arcane and largely irrelevant. When Medicare was enacted in 1965, it was predicted to cost under $12 Billion in 1995. The actual number was close to $100 Billion. It is in excess of $400 Billion today and will exceed $500 Billion in 2012 (with no end in sight). So these estimates by the Administration, CBO and the Ezra Kleins are gibberish. Experience tells us it will run a tab ten times times higher.

Posted by: rsonty | March 2, 2010 9:06 PM | Report abuse

Ezra's the type of wonk that would deliver this rambling treatise, and in his next column would decry derivatives traders on Wall Street I fail to the see any difference. In both cases, it's a lot of complex math that attempts (and fails) to end run some simple rules of mathematics. Ezra, you are overtly partisan, overtly discredited.

Posted by: subframer | March 2, 2010 9:12 PM | Report abuse

This one's over. Obama's health care reform bill will pass, soon. Too bad Ryan ain't got one good word to say. How wrong can Republicans be?

Posted by: dudh | March 2, 2010 9:20 PM | Report abuse

Great analysis with one enormous ommission. Where is you analysis of the credibility of the CBO's projections of revenues and savings?? Does ANYONE think that these estimates will be anywhere close to these numbers? If you do, please contact me about a bridge in Brooklyn. The reality is that the CBO's estimate of revenues are likely far to high and the savings will never materialize. Let's make this simple: how do you increase the DEMAND for health care by more than 30 million people (or more) while at the same time reducing the supply of health care providers (by fixing fees)and LOWER the price of health care? Anyone? Please? There are only two ways that this can work in reality: 1) the government conscripts health care providers to work at the point of a gun or 2) the government rations health care massively and we end up with the same type of "accountability" and "quality" as we saw last week in England with the 400 dead patients at the government run hospital with absolutely NO ONE held accountable for the deplorable conditions that caused the needless deaths. Face it folks, take a number now. If this bill passes, going to the doctor will be like going to the DMV with the same awful, uncaring level of service of unaccountable, mediocre bureacrats because the men and women of ability will go to other fields.

Posted by: MildlyAmused | March 2, 2010 9:41 PM | Report abuse

I don't see how any meaningful discussion about federal debt can exclude informaton on the wars and the military industrial complex. These two are the basis of the debt. For the most part, the wars have not been part of the budget; thus, their costs go right to federal debt. (My bet is that Senator Bunning has never seen a military appropriations bill that he has not voted for.) For the most part, these expenses have been part of the "off-budget expenses," joined by the "borrowing" of the annual SS Trust Fund surplus. Year after year, George W. got away with announcing annual debts that were about half of the real annual debt, when the "off-budget" stuff was added in. How we dig ourselves out of all this and pay back the SS Trust Fund the $2.4 trillion owed is beyond me, but I agree with the author that we somehow have to do it. To do it, we HAVE to stop the wars and reduce the military. That is a must.

Posted by: crossingsg | March 2, 2010 9:58 PM | Report abuse

For what I think is a valid analysis of federal spending, go to: http://www.warresisters.org/pages/piechart.htm
There, you will find the argument that Social Security should not be included on the spending side, since is has a full income offset. With that and much of Medicare eliminated from the spending side, it is the military that spends about 54% of all federal money, or nearly $1.5 trillion out of about $2.6 trillion of total federal spending.

Posted by: crossingsg | March 2, 2010 10:02 PM | Report abuse

Meaningless.

Name one major Government run program that has ever met it's beginning projected budget. Just one. That really is all that matters.

This will turn into another bankrupting Uncle Sugar program that really at it's source, as with all Democratic schemes, is nothing more than redistributing income. Nothing any fancier than that. Stealing from the rich, giving to the poor. Real sophisticated...

Posted by: websterr1 | March 2, 2010 10:27 PM | Report abuse

Mr. Klein,
I don't understand why you don't get indignant after acknowledging Ryan's first point, which is that something we all know will cost 2.3 trillion bucks is being represented by Washington as costing under one trillion.
You are obviously smart enough to know that any CEO or CFO who did such a thing would go to jail for 20 years.
Reid, Pelosi, Hoyer, et. al are not too different from the disgraced and convicted ENRON CFO, Jeffrey Skilling, and deserve the same fate.

Posted by: clynch1961 | March 2, 2010 10:51 PM | Report abuse

While you have gone to great lengths to justify the administrations calculations, I still have one major problem with the bill: not a SINGLE program ever enacted by the Congress has cost what it was projected to cost, and most have exceeded the cost estimates by considerable margins. We all agree that "doing nothing" is not the answer. But "doing everything" isn't the answer either.

Posted by: SavingGrace | March 2, 2010 10:59 PM | Report abuse

"as with all Democratic schemes, is nothing more than redistributing income. Nothing any fancier than that. Stealing from the rich, giving to the poor. Real sophisticated..."


... and of course this contrasts with all Republican schemes, which are nothing more than redistributing income. Nothing any fancier than that. Stealing from the poor, giving to the rich. Real sophisticated...

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

As expected, Ezra Klein will add smoke and mirrors to help Obama and his comrades force us to swallow the Obamacare SCAM.

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.

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 3, 2010 12:25 AM | Report abuse

You are right, websterr1. Obamacare is just another progressive (marxist) scheme to redistribute income and enslave us.

Obamacare is a progressive (Marxist) SCAM that would destroy our health care, our economy, our freedoms, and our future.

As per the 2007 book written by Robert Creamer, a CONVICTED FELON and Obama’s ACORN associate, the main objective of Obamacare is only to increase the power of "progressives" (Marxists) through the “democratization of wealth” (socialism/Marxim) as per the teachings of Saul Alinsky. Creamer wrote in his 2007 book:

* “We must create a national consensus that the health care system is in crisis.”
* “Our messaging program over the next two years should focus heavily on reducing the credibility of the health insurance industry....”
* “We need not agree in advance on the components of a plan, but we must foster a process that can ultimately yield consensus.”

As per those guidelines, Obama and his comrades planned to demonize the insurance industry and to agree to ANYTHING to get their scam approved. They don't care about the "components of the plan." All they want is CONTROL over our health care and our lives.

They want complete power as that of the Marxist thugs who are destroying Latin America. They plan to increase their power through the “democratization of wealth” (socialism/Marxism).
http://the-classic-liberal.com/progressive-agenda-for-structural-change-stand-up-straight/

Posted by: AntonioSosa | March 3, 2010 12:35 AM | Report abuse

I love the structure of this piece - he concedes a huge point, 10 years of revenue for 6 years of services as being a 'deceptive effort to keep the price tag below 1 trillion $' (aka fraudulent) and then procedes to quibble with fairly minor points (nothing to see here folks, lets move along!!)

Regarding the social security trust fund - he admits the budgetary legerdemain, but it's ok because it's done all the time.

Ezra, it is obvious that you want desperately to believe in this bill, but I am far from convinced that it does _anything_ to reduce costs.

Posted by: invention13 | March 3, 2010 12:37 AM | Report abuse

What is hard to believe is that there are still people ready to believe the ridiculous fairy tale of Obama and his comrades that the Obamacare SCAM will reduce costs!

You have to believe in fairy tales to believe that you can provide insurance for 30 million (or is it 45 million?) more people, pay for the hordes of ACORN-type government workers needed to run the Obamacare scam, pay for the corruption generated by those ACORN types, pay billions to cover Obama's BRIBES (to Big Pharma, the AMA, the AARP, and everyone who has been bribed and will be bribed), pay for Obama’s secret deals, including his deal with Big Pharma... and "reduce costs"!

Grownups understand that the Obamacare scam will cost us TRILLIONS, which will have to be paid not only by us, but by our children and grandchildren. Grownups understand that Obamacare is a Marxist scam that will destroy our health care, our economy, our freedoms and our country.

Posted by: AntonioSosa | March 3, 2010 12:40 AM | Report abuse

"Too bad Ryan ain't got one good word to say. How wrong can Republicans be?"

Not very. In this case they're right. This bill is a turkey my great-grandkids are going to be paying for. You're good intentions mean nothing to me.

Posted by: invention13 | March 3, 2010 12:41 AM | Report abuse

You're missing a few points Ezra, which someone as smart as you I know that it wasn't because you forgot, but because you wilfully omitted it.

1) According to Medicare actuaries, overall spending on health care does go up less than 1%, but that was based on a strong excise tax that starts at $21,000 per family, according to Obama's new plan it doesn't get fully implemented until 2018 and the threshhold begins at $27,000 which basically neuters the best cost containment mechanism in the bill. (thanks to the unions and progressives)

So if the CBO and Medicare actuaries were to score it again, that number would be certain to change.

2) The CBO does not say that the rate of reduction of the Deficit would certainly continue into the second decade, citing that they are skeptical that Congress could maintain the proposals as submitted. I shining example of that is the "Doc" fix. This was something that was suppose to keep overall costs contained, but as you and I both know, Congress doesn't have the will to enforce this provision. I gaurantee you that if the bill passes with this measley excise tax, this will never get enacted as well.

Also, I would trust Warren Buffett over both you and Paul Ryan, grant it, Paul Ryan is probably the sharpest tool in the entire congressional shed, and you know your numbers as well, but both of you guys have biased views.

Buffett is someone who supported Obama, and he basically said scrap this bill, simply because this bill doesn't contain costs.

I think I will take his word over yours.

Posted by: Magox | March 3, 2010 1:04 AM | Report abuse

Mr. Klein, you've made a brave effort but you're not good at math. Ryan is right about the infamous "doc fix" (the Medicare Sustainable Growth thing). Here's the problem.

What Dems are doing, for purposes of the health care bill, is saying:

1. We're going to pay $300 billion for new health care services to people who didn't previously have insurance. This is a brand new entitlement.

2. We won't increase the deficit because we'll cut Medicare by $300 billion. We'll decrease the amount of money we pay to doctors who treat Medicare patients. (We'll assume that doctors will still treat Medicare patients, which is a big assumption, but that's a separate problem.)

So it's break even, right?

Wrong, because the Dems aren't really going to cut $300 billion from doctor payments. They're passing a separate bill (the "doc fix") which will allocate $300 billion extra to pay the doctors. They are NOT cutting $300 billion from Medicare.

So they have two bills: inside the Obamacare bill, Medicare costs decrease by $300 billion but outside the Obamacare bill, Medicare costs remain the same.

So why is this a problem? Because they're adding in $300 billion in new spending. Remember that entitlement from back in the first paragraph???

Now how is the new entitlement going to be paid for if they don't really cut Medicare?

This is the problem Ryan is pointing to and he's 100% correct.


Posted by: Quitaque1 | March 3, 2010 4:14 AM | Report abuse

"The SGR problem predates health-care reform and exists irrespective of health-care reform's fate. Attempts to lash the two together are nonsensical."

Yet somehow it's okay to count the savings to broken Medicare programs? It's okay to count savings from exploited bio-fuel tax credits?

Ezra, it's you, not Rep. Ryan, that is being nonsensical here.

Posted by: cprferry | March 3, 2010 8:31 AM | Report abuse

Quitaque1 , glad you're commenting at 4:00am, but you're wrong. The Medicare cuts in the bill reduce payments to inefficient (overpriced) Medicare Advantage plans. Payments to providers don't change. SGR fix has as much to do with the HCR bill as it does with the Iraq War, the Department of Education, National Parks, etc.

Posted by: etdean1 | March 3, 2010 10:44 AM | Report abuse

The only reason why SGR fix isn't in the HCR bill but biofuel tax credits are is Obama and the liberal Democrats' game of deception. It was purposely removed from the House' HCR bill because it cost too much and would have added to the deficit.

Ezra's poor analogy of two houses is weak. It's the same house built upon the same foundation relying on the same floor joists and same copper piping. This is an expansion of the house. As part of those renovations, a new roof should be included into the cost.

Posted by: cprferry | March 3, 2010 10:57 AM | Report abuse

Ezra,

I don't think the statement below is correct. The Social Security "Trust Fund" (which can accurately be defined as money raised by Social Security taxes that was spent elsewhere) contains NON-TRADABLE bonds. They're bonds that are held by one branch of the government payable by another.

The government can (and will) repudiate these debts without impacting the overall credit of the US, because it's not debt held by the public.

"
Though it's true that the trust fund will have to be repaid either through spending cuts or tax increases, the trust fund will be repaid. Otherwise, the government defaults and everything goes to hell. This assumption that the government will pays its debts is not only necessary for accounting purposes but also for, say, investing in Treasury bonds, or in the stock market, or any other facet of American economic life that presumes the continued fiscal soundness of the American government.
"

Posted by: schmidtyphi | March 3, 2010 4:57 PM | Report abuse

Paul Ryan's response to this article can be found here:

http://www.facebook.com/notes/paul-ryan/paul-ryan-responds-to-ezra-klein/362893127447


http://online.wsj.com/article/SB123595257066605147.html

Posted by: baumusc | March 4, 2010 4:36 AM | Report abuse

Its too bad Ryan had to end his speech repeating the same talking points that all of the other Republicans were saying that day about "starting over," "step by step" approaches and "clean sheets of paper." It undermines any notion that he really believes everything he said.

PR: "So what we simply want to do is start over, work on a clean- sheeted paper, move through these issues, step by step, and fix them, and bring down health care costs and not raise them. And that's basically the point."

Posted by: saratogian | March 4, 2010 3:37 PM | Report abuse

@ magox

"Buffett is someone who supported Obama, and he basically said scrap this bill, simply because this bill doesn't contain costs.

I think I will take his word over yours.

Posted by: Magox | March 3, 2010 1:04 AM"


WRONG! Here is what Warren Buffett actually said:


" REBECCA QUICK: This is different than what you've said when we've talked to you in the past. I mean, even a couple months ago when I sat down and talked to you, you said that you would vote, I believe, for the bill if it were in front of you.

BUFFETT: I--if it's a choice...

QUICK: When did you change your mind?

BUFFETT: No, if it was a choice today between plan A, which is what we've got, or plan B, what is in front of--the Senate bill, I would vote for the Senate bill. But I would much rather see a plan C that really attacks costs."


This is from March 1 Squawk Box on cnbc.

Thanks to Media Matters for highlighting this.

Posted by: jobert | March 4, 2010 4:08 PM | Report abuse

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