The Problem With The CBO Score

Jillian Bandes
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Posted: Oct 08, 2009 12:37 PM
The underlying question in the CBO scoring of the Baucus health care bill is how something that costs $829 billion over 10 years will translate into a $81 billion profit. The government's answer, of course, is via $911 billion in "cost savings," -- i.e., measures that will bring in new revenue or save money for Uncle Sam. Those things consist of various cuts to doctor pay (unrealistic) and cuts to Medicare Advantage (unpopular). But they mostly consist of new taxes -- on "cadillac" insurance plans, drug companies, medical device manufacturers and health insurance companies.

The implementation of these taxes in the middle of a recession is both contrary to the President's stated policy objectives (not raising taxes on the lower and middle class) and against his best political interests -- raising taxes is doing exactly the opposite of what most Americans want. But the bigger story, as Kevin pointed out, is that similar government plans never end up staying in their budget (plans like Medicare and Medicaid prove this) and the very existence of centralized health care will lead people to use more of it and create an unsustainable cost cycle. That's actually what the CBO letter itself points out:
The projected longer-term savings for the proposal also assume that the Medicare Commission is relatively effective in reducing costs—beyond the reductions that would be achieved by other aspects of the proposal—to meet the targets specified in the legislation....These projections assume that the proposals are enacted and remain unchanged throughout the next two decades, which is often not the case for major legislation.
In other words, the CBO is saying, "If everything you said goes down exactly the way you say it will, perhaps the savings will be realized. But you're making some assumptions that you shouldn't, and we're more than a little skeptical."

The other big story out of the CBO score is the process by which the health care bill is being written. As Senate Minority Leader Mitch McConnell points out, this bill is being hacked together by a few Democratic staffers and White House bigwhigs -- with precisely zero input from the American people. Already, these closed-door negotiations have caused Rep. John Boehner to complain about seventy "phantom amendments" being inserted by Democrats -- probably extra earmarks for us to pay for. Moderate Democrats have raised red flags about the process, too, saying that they can't support the bill until there is more transparency.

My next question is this: how well are the Dems are going to be able to spin this? Will they be able to sell the CBO score to the American people and yell "It saves money!" while continuing to use new taxes, phantom amendments, and closed-door negotiations to pass fly-by-night legislation?

As a politico friend pointed out to me last night: "This messy process is the way ALL legislation gets passed."  But with the publicity of the health care issue, and the egregiousness of labeling what is so clearly a new taxation scheme a "way to save money," perhaps now is the time when Americans will put their foot down.