Double, Double, Counting Medicare Savings Twice Gets Democrats in Trouble


Behold, the magic health care budget cauldron!

One of the major arguments Democrats have presented in favor of health care reform as of late is that it would both cut the deficit and extend the solvency of Medicare. According to reform advocates, the Senate bill accomplishes both.

Only one problem: It doesn't. Not according to the Congressional Budget Office, anyway, which released a memo this morning saying that such claims double count the bill's presumptive Medicare savings. Here's what CBO director Doug Elmendorf says in his blog entry:

Specifically, CBO has been asked whether the reductions in projected Part A outlays and increases in projected HI revenues under the legislation can provide additional resources to pay future Medicare benefits while simultaneously providing resources to pay for new programs outside of Medicare. Our answer is basically no.

…The key point is that the savings to the HI trust fund under the PPACA would be received by the government only once, so they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation or on other programs.

To describe the full amount of HI trust fund savings as both improving the government's ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings and thus overstate the improvement in the government's fiscal position. (Emphasis added.)

(Link via Phil Klein.)