Editore"s Note
Tilting at Windmills

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June 16, 2009

THE CBO ON HELP.... It was the kind of news that opponents of health care reform were no doubt thrilled to see. The Congressional Budget Office (CBO) late yesterday published an estimate of the costs associated with the Kennedy/Dodd health care bill, crafted within the Health, Education, Labor and Pensions (HELP) Committee.

The results were ugly: the measure, as reviewed by the CBO, "would cost at least $1 trillion over 10 years yet leave tens of millions of people uninsured." Not exactly the kind of legislative package that would generate widespread public support.

If this CBO scoring doesn't sound right, there's a good reason for that. Republican hyperventilating notwithstanding, Jonathan Cohn explains why all of this is premature.

Imagine you were trying to build your dream house and the architect gave you a status report. The design still wasn't finished: He hadn't sketched out the plumbing, the wiring, and the roof. But, he said, he could tell how much it would cost to build what he'd already designed.

You'd be curious about the number; it might offer some hints about how much the house would cost in the end. But you wouldn't spent too much time dwelling on it since, after all, the final price was going to be much different.

Well, that's the same attitude you should take about the estimates of the Senate Health, Education, Labor, and Pensions (HELP) Committee bill that the Congressional Budget Office (CBO) delivered yesterday.... The Senate HELP bill is not yet finished. Like the house design without the plumbing, wiring, and roof, the HELP bill is missing several key elements that would dramatically change the final estimate.

The question then becomes what led to yesterday's CBO results. Why would the HELP committee send over an incomplete bill? Ezra Klein noted, Dems hoped to buy some extra time while working on building some bipartisan agreement. "The HELP Committee's expectation was that the CBO, in crafting its preliminary estimates, would assume something similar to the outline it had seen months before," Ezra explained. "The CBO didn't. In fact, it did the opposite. CBO ran its estimates with no employer mandate and an individual mandate with a laughably small penalty. Members of HELP were shocked by yesterday's estimate. The bill that CBO scored did not look much like the bill they intend to write. Which means that the numbers aren't correct. If HELP is writing a bill with a strong employer and individual mandate, and CBO scores a bill with no employer mandate and a weak individual mandate, it's not clear where that estimate leaves us."

In other words, don't believe the headlines and definitely don't believe the Republicans using this as a reason to oppose reform.

Steve Benen 10:50 AM Permalink | Trackbacks | Comments (13)

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"CBO ran its estimates with no employer mandate and an individual mandate with a laughably small penalty... The bill that CBO scored did not look much like the bill they intend to write."

The current Director of the CBO is Doug Elmendorf. I think it would be useful to ask him to recalculate the numbers with the proposed mandates/penalties in tact, or at least, explain why they didn't.

Posted by: Chris on June 16, 2009 at 11:03 AM | PERMALINK

"Imagine you were trying to build your dream house ...."

The only problem is, if you take Cohn's metaphor literally, you would expect the full cost of health care "reform" to be a lot more than a trillion dollars. But I'm sure we can find the money somewhere, can't we? I mean, the federal deficit isn't too large these days, is it? Oh, I forgot. IT'S HUGE!!!! Never mind.

Posted by: Alan Vanneman on June 16, 2009 at 11:03 AM | PERMALINK

It would also be helpful to know if this is a trillion dollars from someone's government budget, or a NET trillion dollars from people's pockets.

Universal health care is cheaper everywhere else it has been implemented, yet somehow, that cheaper car results in fewer dead infants, and longer, healthier lives. A dollar's a dollar, whether I send it to an insurance company or to the IRS. I'm not going to get the vapors because my tax bill is going up, if my insurance bill goes down by a similar amount.

Posted by: dr2chase on June 16, 2009 at 11:15 AM | PERMALINK

This health care "reform" is going to be like all the tax "reform" we've had in the past. Just another (expensive) band-aid on top of old band-aids trying to hold together a dysfunctional system.

Does anyone really think that either party is interested in real reform? Look at all the people in Congress with financial ties to insurance companies, Big Pharma, etc.

Posted by: Speed on June 16, 2009 at 11:15 AM | PERMALINK

Hey Alan @11:03-- If you're not too lazy to go directly to source material rather than filtering everything through Fox, then read the speech Obama gave yesterday. He explained precisely how he wanted to pay for that trillion, so that his health care proposal would be revenue neutral (i.e. not add to the debt).

With regard to the debt, where were you when Bush took surpluses, turned them into deficits, and grew them beyond belief? Did you complain online then? Did you write your congressman or senators? No. You were silent.

The huge debt is your fault (among others)? You voted for the tax cuts when we still had trillions of debt to pay off. You voted for the misbegotten war in Iraq. You voted for agricultural subsidies for millionaires. You votes for billions lost to no-bid contracts. You voted for economic policies that lead to our current recession and necessitated a stimulus package. You voted for Republicans, and gave us the deficits and debt that you didn't care about until the Dems took over. The problem is you.

You want us to get out of debt? Then do your country a favor, and stay away from the polls on the next election day.

Posted by: CJ on June 16, 2009 at 11:16 AM | PERMALINK

I agree with Alan, the example given lends itself to the whole thing costing A LOT more. bad example/metaphor.

Also, what is this "individual mandate"? Is this the thing Hillary was proposing where everyone is REQUIRED to get health insurance or pay a fine/penalty? If so, I didn't like it then and I don't like it now. Heck, it's one of the reasons I voted for Obama - he opposed it too.

Posted by: Mark on June 16, 2009 at 11:27 AM | PERMALINK

It's interesting to see how the rules of the political discourse change, depending on which party is making the argument.

Now all of a sudden you are finding fault with the CBO?

I'm sure that the HELP Committee will clarify it's draft bill for the CBO, and CBO will calculate some new figures. How low do you want them to go? Would $900 Billion work? $750 Billion?

The employer mandate does not reduce the cost, it just shifts some of the cost from the taxes paid by the private sector to the wages paid by the private sector.

Posted by: MatthewRMarler on June 16, 2009 at 11:27 AM | PERMALINK

The obsessive, almost certainly futile search for bipartisan agreement is going to wind up being the death of real health care reform. The Republican party as it is currently constituted has no incentive to cooperate in health care reform, since credit will go to Obama if it succeeds, and reform is not a big issue for the two main elements of their base: 1) the well off who are well served by the current system and 2) the (shrinking) cohort of reflexive culture warriors who have repeatedly demonstrated that they can goaded into voting against their own economic interests. Democrats need to quit posturing, positioning, and 'hoping to buy time', and just writed a d__n bill. It would also be really helpful if they can get someone on the staff writing the bill who has some understanding of how CBO scoring works, so they won't be blndsided like this again.

Posted by: dcsusie on June 16, 2009 at 11:41 AM | PERMALINK

Folks. When you insure more people, it costs more. That wasn't a surprise. Obama spelled out how his proposal could be revenue neutral in his speech (he pays for the entire $1 trillion in cost savings). Read it.

With regard to mandates, they absolutely do reduce the cost. This the very definition of insurance--we spread the risk. The more households that participate, the lower the per household. The fact that 46,000,000 (give or take) aren't participating results in higher insurance costs and taxes (e.g. Medicaid) for the rest of us.

Posted by: CJ on June 16, 2009 at 11:42 AM | PERMALINK

So the CBO is supposed to estimate costs by guessing what the HELP committee had in mind but didn't specify? I'm not sure you can get two 'divine assessments' in one week.

Posted by: beep52 on June 16, 2009 at 11:47 AM | PERMALINK

"Now all of a sudden you are finding fault with the CBO?"

When the CBO "all of a sudden" makes a mistake, then we "all of a sudden" find fault with it.

Seriously, it's logical to rely on a report that didn't analyze the proposal on the table?

Posted by: Chris on June 16, 2009 at 11:50 AM | PERMALINK

Also, what is this "individual mandate"? Is this the thing Hillary was proposing where everyone is REQUIRED to get health insurance or pay a fine/penalty? If so, I didn't like it then and I don't like it now.

You may not like it, but that is what makes insurance work. "Young" people are healthier than the norm, but they are not as healthy as they think they are -- and there's preventive care and preventive habits that benefit you later in life, that it would be good to get started on while you are young.

Universal care, in most of the rest of the OECD countries, costs less per capita, covers everyone ("mandates", one way or another), results in reduced infant mortality, and healthier, longer lives. Do the numbers, our system does not work, universal healthcare works better.

Posted by: dr2chase on June 16, 2009 at 11:57 AM | PERMALINK

If there is a public option, why does their need to be a mandate enforced by a fine or penalty? Simply enroll and collect the premiums for the public option if people do not demonstrate that they have other insurance.

Universal care, in most of the rest of the OECD countries, costs less per capita, covers everyone ("mandates", one way or another), results in reduced infant mortality, and healthier, longer lives.

And, before anyone says that the lower cost per capita is an artifact of lower labor costs due to the lower GDP/capita in other countries, it is worth noting that the above statement is still true if you replace "costs less per capita" with "costs less as a share of GDP", as well.

Posted by: cmdicely on June 16, 2009 at 1:45 PM | PERMALINK




 

 

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