JONATHAN CHAIT JANUARY 18, 2011
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One of the unusual and frustrating aspects of the health care debate is the sheer imbalance of people who understand the issue at all from a technical standpoint. Even the elite policy wonks of the right make wildly incorrect claims about the issue. Here, for instance, is National Review and Weekly Standard health care writer Yuval Levin defending the Republican Party against Paul Krugman on the "doc fix":
Krugman points to a House Republican analysis of the costs of the health-care bill and then insists that the first and foremost argument in that analysis has to do with the “doc fix” to Medicare—the fact that the support of doctors’ groups for passage of Obamacare was bought with the promise of a long-term repeal of cuts to doctor payments but the cost of that promise was not factored into the cost of the final bill.
I've written about this a million times, and it's pretty simple. In 1997, Congress enacted a change to the formula for reimbursing doctors under Medicare. The change accidentally slashed physician pay far lower than intended. Congress has been cancelling out the reimbursement cut ever since. Republicans constantly claim that the cost of continuing to do so -- which isn't really a cost, just a failure to capitalize on an unintended future saving -- is part of the "real" cost of the Affordable Care Act. Or, like Levin, they claim that Democrats "bought" the support of doctors by promising a long-term repeal of those cuts.
It's true that the House Democrats briefly considered, but ultimately declined, to include the cost of a long term doc fix in a version of the health care bill. But this has nothing to do with anything. The cost of the doc fix exists utterly irrespective of the PPACA. If you repealed the bill, the cost of the doc fix would be exactly the same. (And, indeed, the GOP repeal bill does nothing at all to change that cost.) Anybody who endorses this claim is announcing to the world either that they do not understand the issue or that they're willing to make things up to advance their cause. It's a basic litmus test of seriousness, and the number of Republican-aligned commentators or analysts who pass it could fit into a cubicle.
Levin further argues, "Even with these assumptions, neither the CBO nor the Obama administration’s own CMS actuary argues that the law will actually reduce health-care spending or the rise of health-care costs." Again, false. Let me quote the CBO:
CBO expects that enacting both proposals would generate a reduction in the federal budgetary commitment to health care during the decade following the 10-year budget window—which is the same conclusion that CBO reached about H.R. 3590, as passed by the Senate.
Likewise, CMS finds:
For 2015-19, national health spending is now projected to increase 6.7 percent per year, on average -- slightly less than the 6.8 percent average annual growth rate projected in February 2010.
So why would Levin say that those reports find that health care costs will rise faster when in fact they find that they will rise slower? It's again a very basic confusion between level and rate of growth. The Affordable Care Act provides coverage to 30 million people who don't have it. That raises the level of health care spending. But the bill also contains numerous mechanisms to reduce the rate of growth over time. Ezra Klein has a handy chart:
Both CBO and CMS find that cost growth continues to decline after 2019. The level of spending rises but the trajectory goes down. Levin has every right to disagree with those analyses. But his claim that they find the bill won't reduce the rise of health care costs is simply false.
Most people are not policy wonks. We really on trusted specialists to translate these details for us. This is true as well of elected officials and their advisors. Part of the extraordinary vitriol of the health care debate stems from the fact that, on the Republican side, even the specialists believe things that are simply patently untrue. As with climate change and supply-side economics, there isn't even a common reality upon which to base the discussion.
8 comments
What's particularly frustrating is how deeply entrenched the view that the Doc Fix was a part of the cost of Obamacare has become on the right. It's not just some wonkish detail, it's passed around the information feedback loop as another reason for conservatives to bash Obamacare. And in reality? It has nothing to do with, as Chait says, "anything."
- Jonas
January 18, 2011 at 4:42pm
It is our weakness that political conflicts can be resolved by claiming something like, "lower taxes will yield higher revenues," or "mission accomplished" or "WMD's in Iraq" or "the insurgency is in its last throes" or "death panels" or "We can't raise taxes on any American." Rarely is the price paid for error.
- Nusholtz
January 18, 2011 at 5:04pm
That is a recurring problem when the other side is consistently (1) Epistemically closed or (2) Disingenuous, if not both.
- liberalref
January 18, 2011 at 6:26pm
Chait doesn't understand the difference between absolute and relative metrics. He also doesn't understand ObamaCare -- it has hardly anything in it to reduce the cost of providing healthcare -- the main focus is expanding coverage. The healthcare delivery value chain is essentially unaffected. FACT -- In both absolute and relative terms, healthcare will consume more of the US economy than before between increased taxes and increased spending. HH will send more of their disposable income to Gov and Gov will spend more on Healthcare. I know most here have cognitive disorders, but think about it. If you have a problem with overeating, eating even more and then forcing yourself to throw-up doesn't solve the problem. If you are overspending, spending more and then getting a second job won't solve the problem. ** RE: CBO estimates To be fair to CBO Director Elmendorf, he can calculate only the budget effects of bills he is given. Garbage in, garbage out, as they say. He has stated clearly that his revenue effects rely on the provisions of the legislation remaining unchanged over the next two decades, which, he says, rarely happens. Former CBO directors are not held to such constraints, and Douglas Holtz-Eakin, Elmendorf's predecessor, addressed the validity of the revenue estimates in an article in Health Affairs last summer. He concluded that the new law, rather than reducing the deficit by $124 billion over the next ten years as CBO forecast, would increase it by more than $500 billion and by $1.5 trillion in the decade afterwards. As well as the problems with Medicare savings, Holtz-Eakin wrote that the excise tax on expensive plans, due to take effect in 2018, will not be politically possible, costing the Treasury $78 billion over the next decade and $400 billion the following decade. That is, Congress will back away from the tax, just as it delayed its effective date from 2013 to 2018 after fierce objections from unions. Holtz-Eakin's view that the health care act will increase the deficit is shared by the chief actuary of the Center for Medicare and Medicaid Services, Richard Foster. In a memo published last April, Foster estimated that the net cost of the health care bill-the sum it would add to the deficit--was $250 billion over the years 2010 to 2019. CBO calculates costs to the government, not individuals. It hasn't even computed the increased cost of health insurance to enrollees as younger, healthy Americans choose to pay the fine of $695 or 2.5% of taxable income in 2016 (whichever is less) and legally opt out of insurance.
- mr_rationale
January 18, 2011 at 6:45pm
mr_rationale - Which op-ed column did you pull the bulk of your post from? I forget where I read that earlier in the week, but if you're going to just copy and paste someone else's column, you ought to give credit where credit is due.
- Jonas
January 18, 2011 at 7:42pm
Nevermind, I found it: http://www.realclearmarkets.com/articles/2011/01/13/extreme_budget_illogic_at_the_cbo_98828.html Well done sir!
- Jonas
January 18, 2011 at 7:44pm
I'm not sure why I'm bothering, since I have more important things to do, but really mr._rationale, readers here know that Holtz-Eakin has been shown to be engaging in serial dishonesty about the CBO and cost projections re: the PPACA. You can just google, for example, "Krugman Holtz-Eakin healthcare"--but I'm sure you won't, because the mere mention of Paul Krugman will either make you pitch a fit or come up with yet another disingenuous response or both.
- timteeter
January 19, 2011 at 9:02am
isn't plaigarism a crime?
- GSpinks
January 19, 2011 at 3:11pm