The health-care reform bill's empty promises, and their curious fullness
The Democrats, Megan McArdle says, "misled themselves on the effects of Obamacare -- both political and economic." As evidence, she points to this column by Peter Suderman. I clicked over with great interest. Were the Democrats really misleading themselves? Why would they want to do that? What would be in it for them?
But Suderman's column mostly seems to be misleading his readers. It lists "seven empty promises about ObamaCare" -- but on even cursory examination, few of them are empty at all.
Take No. 3. Suderman says that the "around $900 billion" cost projection was off, because "the CBO later estimated that the law will actually require about $115 billion in additional discretionary spending." But that's just wrong. The discretionary spending is not an estimate of new spending required by the bill. As Doug Elmendorf said, "CBO’s discretionary baseline, which assumes that 2010 appropriations are extended with adjustments for anticipated inflation, already accounts for much of the potential discretionary spending under PPACA." Of the $115 billion, $86 billion was already in the original estimate. What's left is optional spending that Congress may or may not vote to appropriate in the future.
Or look at No. 7. Suderman calls out the administration for saying the bill "will bring down the price of insurance." In reality, he says, "CBO predicted that the law will cause average health insurance premium prices to rise by 10-13 percent in the individual market." That's not right, either.
We'll start at the beginning: CBO reported that costs in the employer markets, which serve 150 million, would go down slightly. So already, the bill brings down the price of insurance for most people. But Suderman, despite the expansive headline, is only talking about the individual market. He doesn't even mention the employer market findings.
The individual market serves 30 million people. And what the CBO found there is that the price of a given insurance plan would go down, but because of the subsidies, the price of the insurance plans that people will choose to buy will go up. Think of it this way: If I put everything in my TV store on sale, and you then walk in and win $1,000 for being my 1,000th customer, you might buy a more expensive TV than you would have otherwise. But the TVs in my store will still be cheaper than they were before.
I also can't get with No. 2: Suderman is annoyed that the administration double-counts certain savings in its rhetoric, and he's right that a single dollar can't both lower the deficit and strengthen Medicare. But that doesn't mean the bill doesn't put Medicare on better fiscal footing, which is how he sells it. Passing the Independent Payment Advisory Board is the single most aggressive move we've ever made to control
Medicare's costs going forward. If it takes effect -- and it will unless the law is changed -- it will undoubtedly put Medicare on better fiscal footing, and no one, to my knowledge, has argued otherwise. They argue, instead, that it won't take effect. But that's an argument against letting Republicans overturn it, not against its efficacy. In any case, Suderman doesn't mention any of the bill's actual policy steps here.
And so it goes. Suderman's fifth point seems to suggest that we're not spending money on the tax exclusion for employer-provided health insurance. Most analysts put that tax break at about $250 billion a year, and the excise tax begins to pare it back. In effect, that's taking money from a federal subsidy for employer-provided insurance and putting it into health-care reform and deficit reduction, just the same that cutting Medicare Advantage reimbursements shifts money from subsidizing private insurance in Medicare and puts it towards health-care reform.
I can think of a lot of arguments against the health-care reform bill. One is that it should go further in dismantling the employer-based system. Another is that it should move us toward a single-payer system, akin to the one that saves so much money for Canada. Another is that it shouldn't force people to buy insurance, and still another is that there should be a public option, and I can go on. But the idea that the administration and the people who supported this bill just convinced themselves of a lot of untrue things and everything they said was a lie just doesn't make a lot of sense.
Conversely, what you see in Suderman's piece is that the plan's critics have convinced themselves of a very big untrue thing: Most everything in the bill is bad, wrong, and maybe even venal. And so rather than saying the administration double-counts some of its Medicare savings in its public statements, he says it does nothing for Medicare, not even bothering to rebut the expected impact of IPAB, experiments in bundling payments, the innovation center, or any of the other concrete reforms that, unlike rhetorical overreach, actually do change the program's fiscal stability. Rather than say that CBO projects the bill will slightly reduce the cost of most health insurance, with larger effects in the individual market that will be canceled out through a combination of subsidies and mandates that will encourage people to purchase pricier plans, he just says it's a lie that the bill will bring down premiums at all.
One of the differences between the bill's supporters and critics comes in that mix of appreciation and opposition to the bill's features and tradeoffs. Most of the people who support the bill are something like 70:30 for the bill -- it makes things better, but there's a lot in there they'd like to be different. The bill's opponents speak as if they're closer to 100% against the bill: Everything is bad, it'll destroy American health care, none of the cost controls will work, all the promises are lies, etc, etc. It's one reason I've always found the bill's supporters so much more convincing than its critics.
September 10, 2010; 3:03 PM ET
Categories: Health Reform
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