JONATHAN COHN JANUARY 21, 2011
I don’t know for certain whether the Affordable Care Act will save money, cost money, or roughly break even. Nobody does. And if conservatives want to argue it's more likely to cost money--because, say, the subsidies are going to grow faster than the official projections suggest--that's a reasonable point to make. I think the evidence for that claim is pretty weak, but I can see how somebody could believe it and make a good faith argument along those lines.
But I'm positively baffled by this argument that Democrats gamed the congressional budgeting system. (Charles Krauthammer’s new column, which Jonathan Chait writes about at his blog, is the latest example.) The implication seems to be that, rather than try and craft a fiscally responsible program, the Democrats instead figured out the CBO’s accounting methods, came up with ways to make an expensive program seem deceptively cheap, and then fiddled with the numbers to get the result they wanted.
I'm baffled by this argument because it's so clearly inconsistent with the historical record. From the very beginning, Obama and many of his key Democratic allies were determined to write a bill likely to reduce the deficit and “bend the curve” on health care spending. This determination reflected both philosophical preference (Obama is a real fiscal hawk, sometimes to my chagrin) and political calculation (more conservative Democrats would be more likely to support the bill if they could tell constituents it would save money).
Not all Democrats shared this disposition. Particularly in the House, plenty of liberals would have been content with a bill that made health insurance nearly universal while modestly increasing the deficit and without shifting the long-term trajectory on health care spending. (Truth be told, I might have been content with that, too.) But the administration, in particular, pushed back. Via statements public and private, Obama and advisers like former Budget Director Peter Orszag made clear that the bill had to be paid for and that it had to change the health care system to make it more efficient.
Early on, Obama and his advisers thought there might be a relatively painless way of achieving this. In particular, they hoped that innovations in the delivery of medical care, like greater use of electronic medical records and financial incentives for more coordination of care among doctors, would produce substantial savings while also slowing the relentless climb of medical expenses. Long-time students of health care, like Harvard economist David Cutler, had written persuasively that such savings were possible.
But the CBO would not consider such savings in its calculations, because the innovations hadn’t really been tried on such large scale or in concert with one another--and that meant there wasn’t much hard data to prove the savings would materialize. The only measures CBO would certify as generating large savings were a tax on health benefits, which a large body of economic literature suggested would reduce private health care spending, and changes in Medicare's reimbursement formulas, which had reduced public health care spending in the past.
It’s worth considering how the administration and its allies might have reacted to the CBO's posture. They could have said the CBO was wrong and pushed ahead with the bill, as they originally wanted to write it. They would even have had grounds for making that argument: CBO has a history of underestimating the savings and/or overestimating the costs of health care laws.
But Obama and the Democrats didn’t do that. They complained a little about the CBO in public and they complained a lot more in private. But they also agreed to write a bill consistent with the CBO’s assumptions. And that meant embracing two extremely unpopular ideas, reductions in Medicare spending and a tax on high-end benefits. Does that sound like trickery to you?
Now, if you want to know what real budget gimmickry looks like, I suggest you read up on the debate over creating a Medicare drug benefit, when President Bush was in the White House and Republicans ran the Congress. When the government's official Medicare actuary predicted the law would cost too much, did the Republicans try and write a more fiscally responsible bill? Hardly. They told the actuary to keep quiet.
If it sounds like I'm aggravated, that's because I am. This argument just won't go away. But maybe I should consider the upside. There was a time when I complained that the Republicans had no concrete ideas for creating jobs. Clearly I was wrong. This relentless effort to discredit the Affordable Care Act’s budgeting has been the equivalent of a full employment for folks like Austin, Ezra, and me. For that, I guess, I’m grateful.