Joseph Antos explains that health care "reform" will ad hundreds of billions of dollars to our national debt because none of the promised cost savings will be realized.

A careful reading of the evidence suggests that the Baucus bill will add as much as $376 billion to the federal deficit through 2019. And that figure understates the full impact of the bill on the budget. If the big-spending parts of the proposal started next year rather than in 2014, the fiscal damage would be much greater.

Can anyone guess why the most expensive parts of the plan won't kick in until 2014? Maybe so that Obama and Congress won't have to face reality until after as many re-elections as possible.

At face value, the Baucus bill seems to be close to what the president ordered. According to the CBO, the bill gives coverage to 29 million uninsured Americans for less than $900 billion while simultaneously reducing the deficit. The problem is that the bill counts as savings large cuts to Medicare providers that will almost certainly never happen.

The Congressional Budget Office has to pretend that they believe that future Congresses will decide to keep these cost savings in place, even though they certainly won't.

The most blatant example is the annual cut in fees paid by Medicare to physicians. The cuts started out small, about 5% a year, but even that was unsustainable. To "solve" the political problem without having to admit to a big increase in the deficit, Congress has given doctors a series of one-year fixes. The foregone payment reductions add up, and next year Medicare is supposed to slash doctor's fees 21%.

Clearly, that will not happen. At the urging of the American Medical Association, Democrats in the House decided to end the charade by permanently granting fee increases to physicians at a 10-year cost of nearly $230 billion. Sen. Baucus accepted responsibility only for the usual one-year fix, at a cost of almost $11 billion. That means he is being credited with $218 billion in savings at which future Congresses will chip away, a year at a time.

There is another $240 billion in cuts to hospitals, home care providers, nursing facilities and hospices that are destined to go the way of those physician fee savings. If none of those reductions are implemented, Medicare spending will increase $458 billion over the next decade, and the deficit will grow by $376 billion.

The "savings" are due to counting promises to save money as actual saved money. The promises will be broken by a future Congress, but the current Congress still wants to get credit now.

These budget games are so obvious that the CBO blew the whistle--but scored the savings anyway. The CBO scores bills as they are written, without trying to second-guess Congress even when there is plenty of reason to do so. The agency explained that their estimates assume that the proposals are enacted and remain unchanged over the next two decades. In a masterpiece of understatement, the CBO pointed out that such provisions are often over-ridden by future Congresses.

That's the trick: when it comes time to actually stop spending the money, Congress will attempt to tug at our heartstrings and show us all the poor people who will be hurt if we don't spend more money. People will buy these "arguments" and the cost savings will never be actualized.

We citizens don't need to be bound by the same foolish assumptions that constrain the Congressional Budget Office. They have to believe Congress because they work for Congress. We don't need to be that gullible.

0 TrackBacks

Listed below are links to blogs that reference this entry: Health Care Cost Cutting: Smoke and Mirrors.

TrackBack URL for this entry:



Email blogmasterofnoneATgmailDOTcom for text link and key word rates.

Site Info