Losing Count of the Double Counts

The Democrats, citing Congressional Budget Office projections, claim the latest version of the health care bill will cut the budget deficit by more than $100 billion in the first decade and $1.2 trillion in the second. As before, those projections depend on Medicare cuts that, given Congress' track record in this area, probably will not be sustained. Furthermore, the Democrats continue to double count Medicare savings, pretending to use them both to pay for insurance subsidies and to improve the program's long-term financial condition. As our own Peter Suderman has noted, both the CBO and Medicare's chief actuary have criticized this trick. Yet the talking points released this morning by House Majority Leader Steny Hoyer (D-Md.) claim the bill both "IS FULLY PAID FOR" and "EXTENDS THE SOLVENCY OF MEDICARE." President Obama made the same assertion in an interview with Fox News yesterday, and Bret Baier called him on it (italics added):

Baier: The CBO has said specifically that the $500 billion that you say that you're going to save from Medicare is not being spent in Medicare. That this bill spends it elsewhere outside of Medicare. So you can't have both.

Obama: Right.

Baier: You either spend it on expenditures or you make Medicare more solvent. So which is it?

Obama: Here's what it does. On the one hand what you're doing is you're eliminating insurance subsidies within Medicare that aren't making anybody healthier but are fattening the profits of insurance companies. Everybody agrees that that is not a wise way to spend money. Now, most of those savings go right back into helping seniors, for example, closing the donut hole.

When the previous Congress passed the prescription drug bill, what they did was they left a situation which after seniors had spent a certain amount of money, suddenly they got no help and they were stuck with the bill. Now that's a pretty expensive proposition fixing that. It wasn't paid for at the time that that bill was passed. So that money goes back into Medicare, both to fix the donut hole, lower premiums.

All those things are important, but what's also happening is each year we're spending less on Medicare overall and as consequence, that lengthens the trust fund and it's availability for seniors.

Baier: Your chief actuary for Medicare said this, that cuts in Medicare: "cannot be simultaneously used to finance other federal outlays and extend the trust fund." That's your guy.

Obama: No — and what is absolutely true is that this will not solve our whole Medicare problem. We're still going to have to fix Medicare over the long term.

Baier: But it's $38 trillion in the hole.

Obama: Absolutely, and that's the reason that we're going to have to — that's the reason I put forward a fiscal commission based on Republicans and Democratic proposals, to make sure that we have a long-term fix for the system. The key is that this proposal doesn't weaken Medicare, it makes it stronger for seniors currently who are receiving it. It doesn't solve that big structural problem, Bret. Nobody's claiming that this piece of legislation is going to solve every problem that's been there for decades. What it does do is make sure that the trust fund is not going to be going bankrupt in seven years, according to their accounting rules —

Baier: So you don't buy —

Obama: — and in the meantime —

Baier: — the CBO or the actuary that you can't have it both ways?

Obama: No —

Baier: That you can't spend the money twice?

Obama: — no, what is absolutely true and what I do agree with is that you can't say that you are saving on Medicare and then spend the money.

Look how long it takes for Obama to concede Baier's indisputable point about double counting. He tries to divert the conversation with irrelevant comments about the prescription drug "donut hole" and the commission on entitlements. He tries to dodge the question by saying "nobody's claiming that this piece of legislation is going to solve every problem." Yes, and nobody's claiming that anybody is claiming that. Finally, he admits that "you can't say that you are saving on Medicare and then spend the money." Yet that is exactly what Obama and his allies in Congress keep doing.

The CBO's preliminary analysis of the bill is here (PDF).