"Show Me the Money [Daniel Foster]
How did the Democrats get the CBO score they wanted, the score that has liberals running a victory lap around the blogosphere?
The short answers seems to be: with more of the same gadget plays that got us the "deficit reduction" in earlier versions of Obamacare.
If you are a regular reader of the Corner, you are already intimately acquainted with the Medicare double-counting. But it doesn't stop there. Consider that $53 billion of the $118 billion in supposed savings over the first ten years of the latest bill (which is still a moving target) comes from increases in Social Security payroll tax revenues resulting from expected increases in wages (the idea being that employers will pay better in an Obamacare world). But even if it materializes, pegging that money to deficit reduction instead of to the continued solvency of Social Security is either naive, disingenuous or both. Likewise, the report counts as savings the estimated $70 billion in premiums to be colllected as part of a new government-run, long-term care program for the elderly. But just like premiums in the private sector, these funds will be used to pay out future benefits, not reduce the deficit.
Oh, and did we mention that the new bill borrows $19.1 billion in savings from the socialization of the student loan industry? (Savings that, as Stephen lays out, are independently dubious).
Of course, most of this is small fry compared to the biggest con of all: the front-loaded taxes that push most of the bill's costs outside the CBO's ten-year budget window. Consider: the bill spends $17 billion in its first four years, and $923 billion in its next six.
But none of this has stopped the usual suspects from trumpeting this preliminary report as a legislative king-maker. Take Ezra Klein:
If you're a liberal House Democrat, here's what you'd be voting against: Legislation that covers 32 million people. A world in which 95 percent of all non-elderly, legal residents have health-care coverage. An end to insurers rescinding coverage for the sick, or discriminating based on preexisting conditions, or spending 30 cents of each premium dollar on things that aren't medical care. Exchanges where insurers who want to jack up premiums will have to publicly explain their reason, where regulators will be able to toss them out based on bad behavior, and where consumers will be able to publicly rate them. Hundreds of billions of dollars in subsidies to help lower-income Americans afford health-care insurance. The final closure of the Medicare Prescription Drug Benefit's "doughnut hole."
If you're a conservative House Democrat, then probably you support many of those policies, too. But you also get the single most ambitious effort the government has ever made to control costs in the health-care sector. According to the Congressional Budget Office, the bill cuts deficits by $130 billion in the first 10 years, and up to $1.2 trillion in the second 10 years. The excise tax is now indexed to inflation, rather than inflation plus one percentage point, and the subsidies grow more slowly over time. So one of the strongest cost controls just got stronger, and the automatic spending growth slowed. And then there are all the other cost controls in the bill: The Medicare Commission, which makes entitlement reform much more possible. The programs to begin paying doctors and hospitals for care rather than volume. The competitive insurance market.
This was a hard bill to write. Pairing the largest coverage increase since the Great Society with the most aggressive cost-control effort isn't easy. And since the cost controls are complicated, while the coverage increase is straightforward, many people don't believe that the Democrats have done it. But to a degree unmatched in recent legislative history, they have.
Maybe this is just one of those intractable attitudinal differences between rationalists and conservatives, but I wonder how Ezra Klein can possibly believe that what he is saying is settled fact. As if reality had a proven track record of conforming to progressives' most optimistic predictions about massive exertions of the welfare state.
The simple fact is that nobody knows what this bill will cost. That's due in part to the guarantee that history will intervene, in messy and unpredictable ways, over the next decade. And it is due in part to the fallibility of the lawyers and staffers who wrote it, and of the accountants who scored it. And it is due, in no small part, to the baroque lengths to which Congressional Democrats have gone in the name of obscurity."
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