What the CBO doesn’t say about Bau­cus bill

The Washington Times Weekly - - Commentary - Don­ald Lam­bro

We are in the be­witch­ing trick-or-treat sea­son when Democrats are telling us their nearly $1 tril­lion health re­form plan is deficit-neu­tral and will re­duce the na­tion’s soar­ing med­i­cal care costs.

Th­ese prom­ises fol­low the du­bi­ous claim that Democrats in Congress in­tend to pay for their na­tion­al­ized plan by carv­ing nearly half a tril­lion dol­lars out of Medi­care and Med­i­caid without re­duc­ing a sin­gle ben­e­fit, ser­vice or med­i­cal pro­ce­dure in ei­ther pro­gram.

Doubt­ing economists (and even some Democrats) say th­ese claims are ques­tion­able at best, down­right du­plic­i­tous at worst, and that if you be­lieve them, there’s a bridge in Brook­lyn you can buy for next to noth­ing.

“Only in gov­ern­ment ac­count­ing could an ad­di­tional 29 mil­lion peo­ple re­ceive new health cov­er­age with a [10 year] sav­ings of $81 bil­lion. By this con­gres­sional logic, Amer­ica could in­sure all 6 bil­lion peo­ple in the world at a sav­ings of tril­lions of dol­lars,” wrote econ­o­mist Diana Furcht­gott-Roth on the Real Clear Mar­kets Web site.

In its sec­ond es­ti­mate of the year on the Se­nate Fi­nance Com­mit­tee plan, the Con­gres­sional Bud­get Of­fice (CBO) said the bill fash­ioned by Chair­man Max Bau­cus, which passed the com­mit­tee Oct. 13 on a 14-9 vote, would not add a penny to the na­tion’s debts, which are es­ti­mated to rise by more than $9 tril­lion over 10 years un­der Pres­i­dent Obama’s bud­get pro­jec­tions.

Crit­ics of the Democrats’ plan don’t be­lieve it for a minute. “Sen. Bau­cus shoe­horns a $1.5 tril­lion to $2 tril­lion ‘uni­ver­sal cov­er­age’ scheme into an $830 bil­lion sack,” says James C. Capretta, for­mer chief health care an­a­lyst in the Of­fice of Man­age­ment and Bud­get.

“Some of the sav­ings come from putting even more peo­ple on Med­i­caid, the most in­ef­fi­cient, waste­ful health plan in Amer­ica that con­fines peo­ple to sub­stan­dard care,” writes health care pol­icy an­a­lyst Grace-Marie Turner of the Galen In­sti­tute in an anal­y­sis of the bill.

“The bill will be paid for by new taxes and il­lu­sion­ary sav­ings in Medi­care and Med­i­caid spending. And it still leaves 25 mil­lion peo­ple without health in­sur­ance,” Ms. Turner said.

The Repub­li­can staff on the Se­nate Bud­get Com­mit­tee ran the num­bers in the Bau­cus bill two weeks ago and came up with a price tag of $1.8 tril­lion when it is fully im­ple­mented over 10 years.

“This is a stag­ger­ing amount of money that will have to be paid for by ei­ther rais­ing taxes, cut­ting Medi­care, or bor­row­ing huge sums of money that will shackle fu­ture gen­er­a­tions with the bur­den of pay­ing off tril­lions of dol­lars in un­paid debt,” said South Dakota Sen. John Thune. who chairs the Se­nate Republi- can Pol­icy Com­mit­tee.

The dif­fer­ence in the Repub­li­can Party’s num­bers and the CBO’s have to do with the Bau­cus bill’s two main rev­enue-rais­ers: an ex­cise tax on ex­pen­sive health care plans and pre­sumed sav­ings from Medi­care. “CBO un­der­es­ti­mates the true cost of both com­po­nents,” said Ms. Furcht­gott-Roth, the Man­hat­tan In­sti­tute econ­o­mist.

“What CBO doesn’t tell Amer­i­cans is that their health in­sur­ance pre­mi­ums would in­crease sub­stan­tially in the decades ahead. The level of health in­sur­ance pre­mi­ums does not have to be in­cor­po­rated in CBO es­ti­mates, be­cause it is not a tax and it is not paid by the fed­eral gov­ern­ment,” she says in her anal­y­sis.

Ac­cord­ing to her pro­jec­tions, by 2019 Amer­i­cans would be pay­ing $46 bil­lion in ex­cise taxes on their health in­sur­ance plans and more than $100 bil­lion in higher pre­mi­ums.

Her higher pre­mium fore­casts also were con­tained in a cost anal­y­sis done for Amer­ica’s Health In­sur­ance Plans, the in­dus­try’s as­so­ci­a­tion, by the gi­ant au­dit­ing com­pany Price­wa­ter­house­Coop­ers.

The au­dit found that un­der the Bau­cus com­mit­tee bill, a typ­i­cal fam­ily health in­sur­ance pre­mium in 2019 would be $4,000 more than pro­jected.

Among the rea­sons: The bill would not draw enough younger, health­ier pol­i­cy­hold­ers into the in­sur­ance in­dus­try’s risk pool, while new fed­eral man­dates on ad­di­tional cov­er­age would drive up the in­dus­try’s in­sur­ance pay­ments.

“Most Amer­i­cans would have to pay a far higher cost for health in­sur­ance since plans would have to ac­cept every­one, re­gard­less of health or pre-ex­ist­ing con­di­tions,” Ms. Furcht­got­tRoth said.

As for those promised Medi­care sav­ings, CBO Di­rec­tor Dou­glas W. El­men­dorf said Congress and the ex­ec­u­tive branch have a his­tory of avoid­ing such po­lit­i­cally sen­si­tive re­duc­tions. “The long-term bud­getary im­pact could be quite dif­fer­ent if those pro­vi­sions were ul­ti­mately changed and or not fully im­ple­mented,” Mr. El­men­dorf said in his re­port to Mr. Bau­cus.

That is why some Democrats greeted the CBO’s re­port with a healthy dose of skep­ti­cism two weeks ago. In­di­ana Sen. Evan Bayh, for one, voiced doubts that CBO’s sav­ings fore­casts could ever be re­al­ized. Ne­braska Sen. Ben Nel­son doesn’t be­lieve the sav­ings claims, ei­ther. “I don’t know that out­side the Belt­way peo­ple be­lieve those num­bers,” he told Congress Daily.

As of this week, the health in­sur­ance in­dus­try’s de­ci­sion to turn against the Bau­cus bill — break­ing its al­liance with the White House — has dealt a ma­jor blow to Obama ad­min­is­tra­tion lob­by­ing ef­forts.

Mr. Obama has con­sis­tently ar­gued that his health care re­form plans would sig­nif­i­cantly lower the na­tion’s health care costs. Now the health in­sur­ance in­dus­try has mounted a ma­jor of­fen­sive charg­ing that just the op­po­site is true: that Oba­macare will drive your med­i­cal in­sur­ance costs through the roof.

Don­ald Lam­bro is chief po­lit­i­cal cor­re­spon­dent for The Wash­ing­ton Times.

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