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Posted at 5:45 PM ET, 01/12/2011

Uncertainty for me, but not for thee

By Ezra Klein

There's uncertainty around cost projections for any bill, and that's even more true for a big piece of legislation with many moving parts like the Affordable Care Act. But whenever I read conservatives talking about the uncertainty involved in these bills, they seem to think it goes in only one direction: Down.

The health-care legislation might save less money than CBO projects. But it also might save more. People like Harvard's David Cutler and CAP's Judy Feder, people who have spent their lives studying health-care policy, think the CBO is far too conservative when it looks at the delivery-system reforms. They may be wrong, but there's certainly as good a case that they're right as there is that employers, in contravention to what CBO expects and what has actually happened in Massachusetts, will start yanking health-care coverage away from employees by the millions. (And, so far, the bill seems to be increasing the number of small businesses offering their workers coverage.)

Or take expert testimony. Megan McArdle gives a lot of weight to the testimony of former CBO director Doug Holtz-Eakin (who now runs the American Action Forum, which is not exactly a home for high-quality, peer-reviewed research), but doesn't mention that former CBO director Robert Reischauer, best known for his unwillingness to bend to the White House during the Clinton reform effort, supports the legislation as a crucial first step in long-term cost containment, and so too does former CBO director Alice Rivlin. Now, Holtz-Eakin might be right and Reischauer and Rivlin might be wrong, but he's certainly not more credible than they are. Since moving to the American Action Network, in fact, he's quite a bit less credible.

And, to get a bit more empirical about it, there are multiple recent examples of the CBO overestimating the costs, or underestimating the savings, of various health-care bills -- including one Republicans should remember well, the Medicare Prescription Drug Benefit.

So is there uncertainty in these things? Yes. But the CBO works to be in the middle of that uncertainty. The final results could match the more optimistic projections of liberals or the more pessimistic predictions of conservatives. In the end, that doesn't worry me too much: As Reischauer put it to me when he explained why he'd vote for the bill, the legislation creates "a platform over which more significant and far-reaching cost containment can be enacted." If parts of it don't work, we can change them. If parts of it work even better than we're expecting, we can double down on them. The real concern is not that the reality won't accord perfectly with the CBO's predictions, but that the political system won't be able to respond to reality.

Correction: In the third paragraph, I say McArdle mentions Doug Holtz-Eakin's testimony in her post. She doesn't. She mentions a different Doug -- Doug Elmendorf, the current director of the Congressional Budget Office. My points in that paragraph are, obviously, retracted, at least as applies to that post. My apologies.

By Ezra Klein  | January 12, 2011; 5:45 PM ET
Categories:  Health Reform  
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Comments

"Megan McArdle gives a lot of weight to the testimony of former CBO director Doug Holtz-Eakin." Of course she does, because the conservative approach is to start with the answer you want and find someone/something that supports it, while ignoring anything that doesn't.

Posted by: wvng | January 12, 2011 5:56 PM | Report abuse

The sky could also go green tomorrow.


But we've watched the SCHIP program erupt in cost by a factor of 10 over the last decade.


Not buying it this time!

Posted by: krazen1211 | January 12, 2011 6:28 PM | Report abuse

I tend to agree with Ruth Marcus that there is more uncertainty regarding the savings in the bill than the costs.

http://voices.washingtonpost.com/postpartisan/2011/01/will_health-care_reform_really.html

Posted by: jnc4p | January 12, 2011 6:30 PM | Report abuse

"If parts of it don't work, we can change them." That is what there is the most uncertainty about.

I think the political system is responding to reality just fine, it's just a very cynical response. The sabotage of a program is rewarded in the ballot box. Republicans are aware of this and will exploit it.

Posted by: will12 | January 12, 2011 6:55 PM | Report abuse

It is somewhat astounding to me that the Health Care law is only viewed by many (particularly critics) in its potential dollars and cents costs vs. benefits and federal vs state issues. While obviously important considerations, there is a moral element that so many critics miss, but is the most main point of the law. What about ensuring the health care of the citizenry? Isn't that the real point? I wish Obama and the Dems would make this moral point more often.

It would be one thing if we were messing with a system that was working. But it's not. Every year fewer people have health insurance but the cost of health care goes up - isn't that a problem that needs to be addressed? Isn't that a cost / benefit equation that is out of whack?

Instead, it is viewed almost in the same mode as welfare (unless of course you are a tea partier who is on Medicare) - another government hand-out for some lazy, good-for-nothing who is getting a benefit that I don't get. However, this is not nearly the same category as welfare or some hand out. This is not simply a transfer of money to somebody to spend on who-knows-what. This is not like providing food stamps that someone uses to buy booze.

This is for health care. To me, it's the 2nd most important thing a government needs to do for its people, after national security. People with diabetes or other chronic conditions cannot get coverage in the current insurance marketplace because it is unaffordable. If these and other people don't get access to appropriate health care, they become more and more unhealthy and may eventually die prematurely because of that.

So if the actual costs of the health care law MAY be somewhat uncertain (even though I think the CBO and other health care economists are pretty conservative in their estimates so it would seem unlikely they are wildly off the mark), this is secondary to the main point, which is to make health care available to all Americans. It has surprised me that when the GOP talks about the 'job-killing' health care reform bill, the Democrats don't respond about the GOP's 'people killing' repeal efforts. I suppose that would be considered extremist talk after Saturday - but it does have the advantage of being true (unlike the GOP's refrain).

Posted by: RobertW3 | January 12, 2011 7:24 PM | Report abuse

Disagreement on the true cost aside, I love how Ezra questions Holtz-Eakin because he's at the American Action Network, but links uncritically to Cutler and Feder writing for CAP.

Posted by: ab13 | January 12, 2011 8:06 PM | Report abuse

"a platform over which more significant and far-reaching cost containment can be enacted."

This is what the corporate backers of the repeal effort are terrified of. They know that once a large piece of government action is put in place, it only gets bigger. The structure that will be put in place by the ACA will gradually force down costs, driving down profit margins of providers. It won't happen in the next 5 years, but long term, if the bill remains, they're screwed.

Posted by: ChicagoIndependant | January 12, 2011 8:40 PM | Report abuse

If Doug Holtz-Eakin did not exist, Megan McArdle would have invented him. She commonly works backward from ideological conclusions to whatever evidence she can conjure up to support those conclusions. That's what defines an ideologue.

Posted by: fredbrack | January 12, 2011 9:33 PM | Report abuse

Search on the web "Wise Health Insurance" if you have a condition such as high blood pressure, asthma, diabetes, cancer, depression or have had an injury, like a broken leg and need health Insurance NOW.

Posted by: earlbishop1 | January 13, 2011 12:57 AM | Report abuse

The "uncertainty" thing is a recurring joke that never dies.
The economy is always uncertain. Any businessman who can't handle uncertainty doesn't belong in business.

I think the uncertainty thing is all just a cover for the real reason the private sector isn't creating jobs: they've laid a bunch of people off without significant productivity decreases. This high unemployment is now normal.
But to acknowledge that is to say we can't just wait for the market to work. It means we either need the government to start putting people to work (there are unmet public goods to be addressed, particularly infrastructure) or figuring out how to make not working full-time livable. Either way that's going to be bigger government and higher taxes, and the GOP can't have that.

Posted by: RCBII | January 13, 2011 7:38 AM | Report abuse

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