Is Health Care Reform Really Deficit Neutral?


Not if you include the cost of the "doc fix"—the permanent change to Medicare reimbursement rates for doctors—that the House yanked out of their reform package so that its bad fiscal news wouldn't show up in their allegedly deficit neutral health care bill. Here's the CBO, responding to a request from Congressman Paul Ryan, on what happens when you look at the total effects of both the doc fix and the reform bill in the House:

CBO estimates that enacting H.R. 3961 [the "doc fix"], by itself, would cost $210 billion over the 2010–2019 period. CBO and the staff of the Joint Committee on Taxation have separately estimated that enacting H.R. 3962 [the health care bill] would reduce federal budget deficits by $109 billion over that same period.

CBO estimates that enacting both bills would add $89 billion to budget deficits over the 2010–2019 period, somewhat less than the sum of the effects of enacting the bills separately because of interactions between their provisions. The agency estimates that the two bills together would increase the budget deficit in 2019 by $23 billion relative to current law, an increment that would grow in subsequent years.

Now, those numbers are reasonably small in comparison to the overall bill. But it's that last phrase—"an increment that would grow in subsequent years"—that is what's most important here. Not only would passing these two bills in combination (as House Democrats originally intended when they included them in a single bill) raise the deficit, it would produce lasting, expanding effects. The total result of reforms to our health care system, by the CBO's estimation, not only wouldn't be deficit neutral, but would actually create a new, long-term problem that's expected to get bigger over time.