CBO Spin and Facts

You may have heard news this morning by Washington Democrats pushing Obama’s Healthcare Reform that new CBO “unofficial scores” predict “savings” for the taxpayers. Not so fast…

House Budget Committee Ranking Republican Paul Ryan (WI) issued the following statement:

 “The Congressional Budget Office has confirmed that there is currently no official cost estimate.  Yet House Democrats are touting to the press – and spinning for partisan gain – numbers that have not been released and are impossible to confirm.  Rep. James Clyburn stated he was “giddy” about these unsubstantiated numbers.  This is the latest outrageous exploitation by the Majority – in this case abusing the confidentiality of the nonpartisan Congressional Budget Office – to pass their massive health care overhaul at any cost.”

Here are some more points of interest:

  • “Although CBO completed a preliminary review of legislative language prior to its release, the agency has not thoroughly examined the reconciliation proposal to verify its consistency with the previous draft. This estimate is therefore preliminary, pending a review of the language of the reconciliation proposal, as well as further review and refinement of the budgetary projections.”
  • Spending on coverage expansions would rise by $48 billion for Medicaid expansions when compared to the recently updated score of the Senate passed bill, and $17 billion on subsidies, for $65 billion total.  This new additional spending would reduce the number of uninsured by only about 1 million in 2019.
  • Of note with respect to the subsidies: “Beginning in 2019, the reconciliation proposal would change the annual indexing provisions so that the premium subsidies offered through the exchanges would grow more slowly; over time, the spending on exchange subsidies would therefore fall back toward the level under H.R. 3590 by itself.”  Many may view this “bait-and-switch” tactic as a budgetary gimmick designed to reduce the long-term cost of the bill.
  • The Cadillac tax would be reduced by $117 billion, from $149 billion in H.R. 3590 to $32 billion under reconciliation.  Note also that the bill would reduce the inflation threshold from the consumer price index (CPI) plus one percentage point to CPI, beginning in 2020.  Some may also view this as either a budgetary gimmick to reduce the bill’s long-term costs, or a massive tax increase on the middle class in future years—long after President Obama will leave office.
  • The bill includes additional Medicare savings proposals, including market-basket adjustments that would grow over time.  The reconciliation bill itself includes $60.5 billion in additional Medicare reductions, raising the total to $523.5 billion.
  • The reconciliation bill contains a total of $155.8 in new tax increases, although a breakout of these numbers is not yet available.
  • The scoring provisions appear to provide a temporary increase in Medicaid payments for primary care physicians—however it would also appear that this increase expires in the budgetary “out years,” raising additional questions about how Medicaid payments will be cut (and beneficiaries will be affected) in the years after 2014—right when Medicaid is expected to enroll an additional 16 million individuals.
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