The Real Story On Health Care Costs

A smart health care observer e-mails:

One thing to remember, though.  It's not really correct to say that a HELP-like scheme will necessarily inflate the deficit.  In fact, on the expenditures side, the Finance bill is going to look extremely similar.  There will be subsidies for the poor and working class, tax credits for small business, some increases in what providers are paid, etc.  Just like in HELP.  In addition, Finance will have one very large chunk of extra expenditures -- a Medicaid expansion -- that HELP doesn't.

But Finance will also have the revenue and offsets -- some combination of employer mandate, exclusion reform, Medicare savings, redacted Medicare Advantage payments, and tax hikes on the rich.  And when you put those all together, it should be revenue netural.

I guess what I'm saying is that it's not really true that the partial HELP bill shows us that health reform will grow the deficit. It all depends on whether lawmakers pay for those expenditures -- which is something we've known all along. 

The fact that HELP didn't indicate how to pay for them is entirely a function of their decision not to fill in certain blanks right now (the employer mandate) and their jurisdiction (they can't do new taxes). Which, by the way, is why you'er right that it was really stupid to submit a partial bill -- although I gather (a) they thought CBO would take into account promises to fill in the blanks (b) they may have needed a placeholder estimate to start markup.

The real issue right now: the internal CBO score of the Senate Finance Committee bill, which came in way overbudget. Even though the CBO's assumptions are very conservative, the bill won't make it anywhere unless the $1.6 trillion cost estimate is somehow reduced, at least in the CBO's eyes.  In some ways, it's a question of values: is it worth an additional $1.6 trillion over ten years to reform health care in a meaningful way and cover everyone? Or are the political consequences of deficits to great to bear?