October 13, 2009

October 13, 2009 | Commentary on Health Care

CBO Report Shows Baucus Bill's Problems

CON: CBO Report Shows Baucus Bill's Problems: Robert Moffit, Ph.D.

Finally, a victory for Obamacare! Or so the media claims.

According to reports, the CBO said the Senate Finance Committee's highly conceptual health care reform legislation -- put together by committee chairman Sen. Max Baucus, D-Mont. -- would reduce the federal budget in 10 years. But what exactly did the CBO say?

We read the report and highlighted some important sentences omitted from that cheering coverage:

"CBO and [the Joint Committee on Taxation's] analysis is preliminary in large part because the chairman's mark, as amended, has not yet been embodied in legislative language." In other words, the Senate Finance Committee has yet to produce a real bill, with real bill language, and instead has been marking up a conceptual framework. There's no telling what would change once there's an actual bill, or what that would mean for CBO's projection. As the CBO notes, "Those estimates are all subject to substantial uncertainty."

"These projections assume that the proposals are enacted and remain unchanged throughout the next two decades, which is not often the case for major legislation." Much of the deficit reductions the CBO credits come from significant cuts in Medicare, primarily in payment reductions for Medicare Advantage.

Congress has a long and uncomplicated history of restoring the cuts it makes to Medicare. Just look at the "doc fix" issue, in which Congress, year after year, delayed cuts in physician payments. But CBO actually takes pain to explain these deficits aren't likely to happen.

"CBO has not extrapolated estimates further in the future because the uncertainties surrounding them are magnified even more." America is swimming in debt. While the CBO provides analysis for the first 10 years, there are no mentions of what this enormous legislative framework could do to deficits 20 or 30 years later.

We know the federal budget is hemorrhaging trillions in deficits. Economists predict this will worsen from the current unfunded promises to be paid out for Medicare, Medicaid and Social Security. We have no idea what the real, long-term cost of a new federal health program would be.

What Americans need is real legislative language, the five days President Barack Obama promised the public would have to see any bill online before it's voted on, and more accountability from our elected officials. After all, they're overhauling one-sixth of the U.S. economy and changing the way we get (or don't get) our health care.

Robert E. Moffit, Ph.D., is Director of the Center for Health Policy Studies at The Heritage Foundation.


PRO: GOP Ignores CBO Score of Health Care Reform: Igor Volsky

According to the Congressional Budget Office, the Senate Finance Committee's health care bill "will result in a net reduction in federal budget deficits of $81 billion between 2010 and 2019 and reduce the federal budgetary commitment to health care." But the positive score isn't winning converts.

Sen. Lindsey Graham, R-S.C., suggested Democrats should "start over" on health care reform. Senate Minority Leader Mitch McConnell, R-Ky., dismissed the score, declaring, "This partisan Finance Committee proposal will never see the Senate floor."

The Baucus bill requires substantial changes, but the Republican effort to invalidate it is disingenuous. It's hard to argue for bipartisan deficit-neutral health care reform and oppose a measure that incorporates pages of Republican ideas and actually reduces the deficit. To make that argument, one must pretend that the Baucus bill is something it's not.

The bill is still far from perfect. The coverage provisions are "significantly lower than the projections from the House bill."

The committee should invest in higher affordability credits or improve affordability measures by allowing the Exchanges to "negotiate with plans for lower bids, encourage plans to form select networks and exclude plans that do not offer good value and cost effectiveness."

Congress should replace the proposed network of cooperatives -- which, according to the CBO, are "unlikely to establish a significant market presence in many areas of the country or to noticeably affect federal subsidy payment" -- with a robust public option that could save the government as much as $150 billion through 10 years.

It should eliminate the "fail-safe" clause that "automatically" cut subsidies in the exchange to avert a projected increase in spending, strengthen employer-based coverage by replacing the bill's free-rider provision with a pay-or-play employer mandate, and improve consumer protections by regulating the insurance plans of large, self-insured corporations and lowering the amount insurers can charge older people for coverage.

The Baucus bill provides Congress with an important opportunity to build up and incorporate many progressive criticisms into the final Senate bill. After all, Republicans have continuously demonstrated that they will paint even the most conservative health bill as an expensive government takeover.

Igor Volsky is a health care researcher at the Center for American Progress and co-author of "Howard Dean's Prescription For Real Health Care Reform."

About the Author

Robert E. Moffit, Ph.D. Senior Fellow
Center for Health Policy Studies

First Appeared in the San Francisco Examiner