Cutting the Deficit is Not the Same as Spending Less

Peter Suderman | November 2, 2009

The New York Times' health-care blog has a long post going over the fuzzy numbers House Democrats have used to make their recently released, 1,990-page health-care bill more palatable. The post covers a lot of the same territory as I did last Friday: It's only $900 billion if you look at the net rather than the gross; the score doesn't account for the doctors' Medicare "fix"; the bill increases Medicaid costs for states by $34 billion (which isn't counted in the score). And, the post adds, it's not clear that the bill "bends the cost curve," in other words, that it reduces the rate of rise in health-care spending. 

The post ends, however, with a response from Florida Democrat Alan Grayson, who takes issue with the idea that Democrats should be talking about budgeting or cost-curves at all:

Representative Alan Grayson, Democrat of Florida, who has earned himself a reputation recently as a rabble-rouser, said that Democrats had done themselves a disservice by focusing on economic arguments. 

“We have wasted so much time talking about bending the cost curve, people have no idea what that means,” Mr. Grayson said. “Why would you want to bend a curve? It’s already bent.”

So Mr. Grayson is focusing on another number — the 44,789 Americans that he says die every year for lack of insurance. “The messaging was just wrong, and now it’s right,” Mr. Grayson said. “We are saving people’s lives and saving money. That’s what really matters.”

Now, some may think it's useful for a Democrat to be adopting an aggressive, moralistic tone on health-care reform, but the problem is that at least half of Grayson's primary claim just isn't true. 

Let's leave aside for a moment Grayson's blustery claim that the bill will save lives (which is impossible to verify: even if you accept his lives-lost statistic, there's no way to account for long-term future losses due to reduced medical R&D); his idea that the bill will save money is just wrong, at least by the traditional definition in which "saving money" means "spending less." Even if you take the CBO at its word that reform will cut the deficit (a sketchy claim that even the CBO seems to know is unlikely) cutting the deficit isn't the same as spending less. It's entirely possible to cut the deficit and yet still spend more. 

It's true that the reform bills, as written, produce some savings by cutting certain types of Medicare expenditures. But that money is then repurposed to help pay for subsidies so that lower-income people can buy insurance. And that money only pays for some of the new expenditures in the bill. The rest comes from either a surtax on expensive insurance plans (in the Senate plan) or a new tax on couples who earn more than a million dollars a year and individuals who earn more than $500,000 a year (the House plan). Either way, what these bills do isn't save money. Instead, they spend more, but also bring in more revenue through new taxes, theoretically resulting in a lower deficit over the long haul.

Comments

|11.2.09 @ 3:57PM|#

"the problem is that at least half of Grayson's primary claim just isn't untrue."

Care to rephrase?

Peter Suderman|11.2.09 @ 3:58PM|#

Yeah, let's try that one again.

Paul|11.2.09 @ 3:59PM|#

Democrat Alan Grayson, who takes issue with the idea that Democrats should be talking about budgeting or cost-curves at all:

It's nice to see they're just coming out and admitting that cost and budget are foreign, exotic animals.

Johnny Longtorso|11.2.09 @ 4:28PM|#

Noonan: We're Governed by Callous Children
...I talked with an executive this week with what we still call "the insurance companies" and will no doubt soon be calling Big Insura. (Take it away, Democratic National Committee.) He was thoughtful, reflective about the big picture. He talked about all the new proposed regulations on the industry. Rep. Barney Frank had just said on some cable show that the Democrats of the White House and Congress "are trying on every front to increase the role of government in the regulatory area." The executive said of Washington: "They don't understand that people can just stop, get out. I have friends and colleagues who've said to me 'I'm done.'" He spoke of his own increasing tax burden and said, "They don't understand that if they start to tax me so that I'm paying 60%, 55%, I'll stop."...

Johnny Longtorso|11.2.09 @ 4:28PM|#

Noonan: We're Governed by Callous Children
...I talked with an executive this week with what we still call "the insurance companies" and will no doubt soon be calling Big Insura. (Take it away, Democratic National Committee.) He was thoughtful, reflective about the big picture. He talked about all the new proposed regulations on the industry. Rep. Barney Frank had just said on some cable show that the Democrats of the White House and Congress "are trying on every front to increase the role of government in the regulatory area." The executive said of Washington: "They don't understand that people can just stop, get out. I have friends and colleagues who've said to me 'I'm done.'" He spoke of his own increasing tax burden and said, "They don't understand that if they start to tax me so that I'm paying 60%, 55%, I'll stop."...

|11.2.09 @ 4:36PM|#

Let's leave aside for a moment Grayson's blustery claim that the bill will save lives

What a noob. Doesn't he know to claim that the bill will save or create lives?

Johnny Longtorso|11.2.09 @ 4:42PM|#

Abortions aren't covered then?

*ducks*

Xeones|11.2.09 @ 4:54PM|#

Abortions aren't covered then?

Neither are contraceptives, apparently.

Death Panelist|11.2.09 @ 5:07PM|#

Isn't Grayson the one claiming to have worked as an economist?

|11.2.09 @ 5:44PM|#

Isn't he Robin?

|11.2.09 @ 5:08PM|#

"the problem is that at least half of Grayson's primary claim just isn't untrue."

Care to rephrase?

I'd go with, "Grayson's claim is complete and utter bullshit."

|11.2.09 @ 5:26PM|#

Mr. Grayson said. “Why would you want to bend a curve? It’s already bent.”

I'm pretty sure a straight line, like y=2x, is still called a curve.

Ike|11.2.09 @ 5:50PM|#

I, for one, applaud Congressman Grayson's logic, and believe the world would benefit from the extension of said argumentation:

Mr. Grayson said. “Why would you want to bend a curve? It’s already bent.”

Why would you want to make people less sick? They are already sick!

Why would you want to make people live longer? They are already going to die!

Why would you want to oust a Florida Congressman? He's already in someone's pocket!

Chad|11.2.09 @ 7:23PM|#

We should adopt Japan's medical system. They do more privately funded medical R&D, as a fraction of GDP, than we do, despite being raving socialists with thier universal coverage. One more free market myth trumped by the real world...

Tim Cavanaugh|11.2.09 @ 9:31PM|#

Am I the only one who has a recurring vision of Alan Grayson as a funeral director who hunts down teenagers necking in the cemetery at night?

|11.5.09 @ 6:53PM|#

"but the problem is that at least half of Grayson's primary claim just isn't true. "

And as someone who worked for FreedomWorks, Suderman knows about making untrue claims.