There was a lot of buzz yesterday about the report from the Centers for Medicare and Medicaid Services on the impact of health care reform. Conservative spin: the bill is an utter failure! Liberal spin: It shows that the bill is great, except for the cost control part, which we can totally fix later. Tim Noah, in a category by himself, spins a conspiracy theory about a dark plot by CMS to protect its budget from cuts. None of these is quite right.
First, the conspiracy theory: it's true that CMS would have a smaller budget under the House and Senate bills. And it is true that government bureaucrats will fight vicious turf wars to prevent their budgets from being slashed. But the part of CMS's budget that is being cut is the part that doesn't give it much power; the biggest savings come from automatic cuts to provider payments. As far as I can tell, HR 3962 actually increases the part of the budget that bureaucrats care about, which is the money to hire staff and expand their empire. CMS doesn't lose power, influence, or important capabilities under health care reform. It gains them.
Second, what does the CMS report tell us about health care reform, and specifically HR 3962, the bill it analyzed? For one thing, it tells us that the exchanges, the mandates, and the subsidies are mostly a complicated sideshow. The real action is in Medicaid. Expanding Medicaid to 133% of the poverty line accounts for most of the decrease in the number of uninsured. The exchanges are expected to cover only 13 million new people, or less than 5% of the population. We're not so much restructuring the health system as making one of its sectors much bigger.