Will They Actually Bend the Cost Curve?

Right and left debate the CBO estimate

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Will the Democrats' health reform bill reduce the deficit? According to the non-partisan Congressional Budget Office, it will. The CBO estimates that over the first ten years, it will lower the deficit by $130 billion and, over the next twenty years, by $1.2 trillion. But critics of the bill say the scoring relies on dubious cost provisions that exaggerate future savings. Can the current legislation "bend the cost curve?" Health care thinkers on the left and right tussle it out:

  • No, Saving Provisions Have Been Gutted, writes Megan McArdle at The Atlantic: "The proposed changes increase spending dramatically, most heavily concentrated in the out-years.  The gross cost of the bill has risen from $875 billion to $940 billion over ten years--but almost $40 billion of that comes in 2019.  The net cost has increased even more dramatically, from $624 billion to $794 billion.  That's because the excise tax has been so badly weakened.  This is of dual concern: it's a financing risk, but it also means that the one provision which had a genuine shot at 'bending the cost curve' in the broader health care market has at this point, basically been gutted.  Moreover, it's hard not to believe that the reason it has been moved to 2018 is that no one really thinks it's ever going to take effect. It's one thing to have a period of adjustment.  But a tax that takes effect in eight years is a tax so unpopular that it has little realistic chance of being allowed to stand."
  • Yes, This Is a Conservative Estimate, writes Jonathan Cohn at The New Republic: "Remember, when the CBO makes a projection for how much a program will cost over time, it isn't just spitting out a single number. It's giving a range of numbers. It's typically the midpoint that you hear about, but there's always a chance that the number will be higher or lower, by a certain interval. And, in order to play it safe, CBO decided it would judge health care reform based on the worst possible estimate within that interval."
  • No, the Score Doesn't Reflect the Bill's True Cost, writes Jeffrey Anderson at The Weekly Standard: "To see the bill’s true first-decade costs, we need to start the clock when the costs would actually start in any meaningful way: in 2014.  The CBO says that Obamacare would cost $2.0 trillion in the bill’s real first decade (from 2014 to 2023) — and much more in the decades to come. But $2.0 trillion wouldn’t be the total ten-year costs.  Instead, that would merely be the 'gross cost of coverage provisions.'  Based on earlier incarnations of the proposed overhaul, the total costs would be about a third higher (the exact number can’t be gleaned from the CBO’s analysis, which is only preliminary and is not a full scoring) — making the total price-tag between $2.5 and $3 trillion over the bill’s real first decade. :
  • Yes, the Cost-Saving Provisions Are There, writes Ezra Klein at The Washington Post: "Democrats have gotten the toughest scorekeeper in Washington to bless their effort... The bill cuts deficits by $130 billion in the first 10 years, and up to $1.2 trillion in the second 10 years. The excise tax is now indexed to inflation, rather than inflation plus one percentage point, and the subsidies grow more slowly over time. So one of the strongest cost controls just got stronger, and the automatic spending growth slowed."
This article is from the archive of our partner The Wire.