The New York Times health care blog has a post about the games that politicians are playing with the cost of their health care bill--in this case, the new House bill that was initially reported as costing less than $900 billion. A more accurate assessment would have been $1.05 trillion:
Throughout Thursday, news accounts, including our own, focused on $894 billion, the total cost given out by aides to the House speaker, Nancy Pelosi, before the official cost analysis was released by the Congressional Budget Office.
But a closer look at the budget office report suggests that the number everyone should have reported was $1.055 trillion, which is the gross cost of the insurance coverage provisions in the bill before taking account of certain new revenues, including penalties by individuals and employers who fail to meet new insurance requirements in the bill.
Because Obama set a $900 billion target--probably sensibly, since the politics of a $1 trillion health care bill are tricky--the House wanted to get their proposal under that line. The problem is, they also want to subsidize lots and lots of people, which is expensive.
I expect that the reaction of many people, maybe even most, is "Who cares whether we use gross or net cost, as long as it's deficit neutral?" I'm sympathetic, but there really are very good reasons to care:
1. This bill will not actually deficit neutral; it's just scored deficit neutral. This is not the fault of the CBO, which is doing its job. But the bills are loaded down with a bunch of "automatic spending cuts" and similar gimmicks which are very unlikely to happen. We did the same thing with Medicare in the Balanced Budget Act of 1997, and by 2003--i.e., the first year that the cuts really started to cut--Congress had mostly undone them.