Obamacare

What Does the Congressional Budget Office Say About Health Care Reform?

|


In a column on health care today, E.J. Dionne argues that the Congressional Budget Office has cleared the way for reform:

The core issues of this debate have been settled. The Congressional Budget Office has swept away the major arguments that opponents of reform have been trying to make. The bill before the Senate would cut the deficit, not increase it, and would stabilize or reduce health care premiums for most people, not raise them. The proposal contains serious cost-control measures that can be built on over time. Passing health care reform is thus not only morally necessary, but also fiscally responsible.

These are certainly the numbers that have gotten the most play in the press. But looking a little closer, I'm not sure CBO confirms any of this.

On deficit neutrality, the CBO has warned strongly on repeated occasions that there's a long history of Medicare reimbursement cuts not coming to pass, and that the bill's score would change substantially if that were to happen once again (which many believe is likely). The CBO has also explicitly stated that if you include the legislative fix to the last round of failed reimbursement cuts—as House Democrats did in their original bill—the total effect on the deficit is decidedly not neutral.

And while it's true that the CBO expects premiums for those who receive insurance through their employers to stay roughly flat, the CBO also expects premiums in the individual market—the market that this bill was primarily intended to reform—to jump significantly. Any premium reductions in that market would come through taxpayer-funded subsidies, not through reform's magical shrinking effect on premiums.

Moreover, the CBO simply hasn't said that the bill's cost-control measures are likely to pay off. If anything, it's said the opposite. Over the summer, CBO chief Doug Elmendorf said he believed the reform bills he was seeing at the time would bend the cost curve in the wrong direction. Since then, the CBO has taken the official position that it can't evaluate one way or another. But given that 1) the major components of the bills are largely the same now as they were this summer and 2) Medicare's actuary has stated that reform is likely to increase costs, I think it's more than reasonable to be skeptical of any claims that the bill will reduce medical spending.