[D]uring the decade following the 10-year budget window, the increases and decreases in the federal budgetary commitment to health care stemming from this legislation would roughly balance out, so that there would be no significant change in that commitment.” That is right, health care reform will not increase the Federal Government’s budgetary commitment to health care.
I have also heard it argued that health care reform will increase the budget deficit. That, too, is false, plainly, patently false. The bipartisan Congressional Budget Office says our plan would reduce the Federal deficit by $130 billion within the first 10 years … reduce the deficit in the first 10 years. That trend would continue, the CBO says, over the next decade. During the next decade, CBO says our bill would reduce the deficit roughly $450 billion. That is nearly one-half trillion dollars in deficit reduction, according to the Congressional Budget Office, in the second 10 years.
In both respects, Chairman Baucus is accurately quoting CBO.
Q1: If the federal government’s budgetary commitment to health care is on an unsustainable path, and if this bill “will not increase” that commitment, is that acceptable?
On deficits, here’s what CBO wrote about the Reid amendment’s long-run deficit effect (p. 15):
In the decade after 2019, the gross cost of the coverage expansion would probably exceed 1 percent of gross domestic product (GDP), but the added revenues and cost savings would probably be greater. Consequently, CBO expects that the bill, if enacted, would reduce federal budget deficits over the ensuing decade relative to those projected under current law … with a total effect during that decade that is in a broad range around one-quarter percent of GDP. The imprecision of that calculation reflects the even greater degree of uncertainty that attends to it, compared with CBO’s 10-year budget estimates. The expected reduction in deficits would represent a small share of the total deficits that would be likely to arise in that decade under current policies.
Q2: Is that good enough? What happened to “health care reform is entitlement reform” and health care reform as the solution to our long-term deficit problems?
In addition, the Reid amendment excludes all but the first two years’ effects of the so-called “Medicare doc fix,” a multi-hundred billion dollar additional cost, and most analysts think the Congress would be likely to undo some of the Medicare savings proposed in the Reid amendment. The deficit-increasing provisions are certain, while the deficit-reducing provisions are uncertain.
If you’re concerned about long-run budget deficits, you should not make a massive new entitlement spending commitment, exclude a multi-hundred billion spending item that is almost certain to be enacted elsewhere, bet on speculative offsets, all to achieve the unimpressive goal of reducing deficits by “a small share of the total deficits that would be likely to arise in that decade under current policies.”
We need massive future spending reductions to address exploding future deficits, not to redistribute resources to a new entitlement program. This is politically painful but absolutely necessary.