These are fairly large assumptions! Congress does not have a good record at cost control, to say the least. Entitlements tend to grow more expensive over time, not less. And the “payment rates for physicians services in Medicare,” the so-called “doc-fix,” has never happened. Meanwhile, as the Dude would say, “New information has come to light, man“:
Savings from Medicare touted by Democrats as a means to pay for the Senate health care bill were double-counted and the legislation will increase the deficit, not decrease it, a senior Republican senator said Wednesday, citing a new letter from the Congressional Budget Office. As the Senate prepares for a crucial vote before final passage of a massive overhaul bill that Democrats argue will reduce the deficit by $132 billion over 10 years, Sen. Jeff Sesssions, R-Ala, said the nearly $500 billion in cuts to Medicare actually will add $300 billion to the deficit.
From the CBO’s letter to Sessions (not yet posted online):
The improvement in Medicare’s finances would not be matched by a corresponding improvement in the federal government’s overall finances. CBO and JCT estimated that the PPACA as originally proposed would add more than $300 billion ($246 billion + $69 billion + interest) to the balance of the HI trust fund by 2019, while reducing federal budget deficits by a total of $130 billion by 2019. Thus, the trust fund would be recording additional saving of more than $300 billion during the next 10 years, but the government as a whole would be doing much less additional saving. CBO has not undertaken a comparable quantitative analysis for the PPACA incorporating the manager’s amendment, but the results would be qualitatively similar. The reductions in projected Part A outlays and increases in projected HI revenues would significantly raise balances in the HI trust fund and create the appearance that significant additional resources had been set aside to pay for future Medicare benefits. However, the additional savings by the government as a whole-which represent the true increase in the ability to pay for future Medicare benefits or other programs-would be a good deal smaller. The key point is that the savings to the HI trust fund under the PPACA would be received by the government only once, so they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation or on other programs.
This sort of double-counting happens quite a bit in government budgeting, of course. But it further damages the claim that health care reform is also entitlement reform and deficit reduction combined into a single big-government package. Expect senators Sessions, Kyl, and Gregg to highlight this issue over the coming days. And ask yourself: How big will the deficit be not only in 2010, but when Obama stands for reelection in 2012?
