Now This Cbo Projection Should Worry You

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THE TREATMENT JUNE 17, 2009

Now This Cbo Projection Should Worry You

Attention fellow liberals who want health care reform: You are in danger of losing the fight for universal health insurance. And it's not only--or even primarily--because of the public plan.

It's because of the money.

On Tuesday, the Congressional Budget Office delivered its scoring of a bill that the Senate Finance Committee had submittted. The (relatively) good news was the projected impact: The proportion of people without insurance would drop by two-thirds. But the price tag came in at $1.6 trillion over ten years. That was a lot higher than expected.

It's not clear to me why the score came so high; I don't know whether it was a problem of bigger outlays (on subsidies, Medicaid expansions, etc.) or smaller offsets (efficiency savings, tax increases, etc.). All I know is that Finance members and their staffers were hoping to come in a lot lower.

And the timing of the announcement was just awful. It came one day after the CBO delivered another projection, this time to the Senate Health, Educaiton, Labor, and Pensions (HELP) Committee. That verdict was different: HELP's language, according to CBO, would mean outlays of just $1 trillion. But CBO also predicted the HELP bill would ultimately reduce the number of people without insurance by less than half.

Republcians pounced on this as proof that reform was a boondoggle, not worth $1 trillion.  It was a silly claim; HELP hadn't submitted a full bill, so the projections on both cost and coverage were effectively meaningless. (For more on that, see this report from the Center on Budget and Policy Priorities.) But the Republican attacks clearly rattled centrist Democrats. And when the Finance projections came in, they began announcing that something drastic had to be done. "It’s clear there have got to be changes made to make the whole package affordable," Kent Conrad, a Finance member, told the New York Times.

Senate Finance Chariman Max Baucus, who has committed himself to a bipartisan solution, apparently agrees. He and his staff are now telling reporters that they will do what it takes to keep the price of reform from exceeding $1 trillion over ten years.

This is a problem.

You can cut a $1.6 trillion reform bill down to $1.3 or even $1.2 and still come up with a pretty good program. In fact, some reforms designed to reduce the program's cost would actually make it better. You could, for example, introduce more aggressive payment reforms to reward efficiency and outcomes. You could create a real public plan that controls costs better than private insurers could. You could even do both. (More on this later today.)

But my suspicion--based on what I've heard and seen over the last few months--is that knocking the price tag all the way down to $1 trillion will mean a lot less money to subsidize insurance for people who can't afford it and far fewer guarantees that insurance would be adequate. In other words, you could end up with many more people still uninsured or underinsured.

Of course, the final Senate legislation will be some sort of compromise between the Finance and HELP bills. And the Senate must ultimately reconcile its legislation with whatever the House produces. In other words, there are myriad opportunities to push legislation in a more generous direction, even if Baucus follows through on his promise to deliver a plan that costs no more than $1 trillion. (And, who knows, maybe he won't.)

But that's not going to happen without a serious political push from the left. And that push can't just involve organizing, although organizing will have to be a huge part of it. It also has to involve some substantive positioning. Can liberals live with a cap on the health benefits tax exclusion, in order to raise more revenue? Will they embrace reimbursement changes for hospitals, despite the hospiatls' own protests, to free up some more money? Will they go for seroius comparative effectiveness research, something a lot of disease groups have been protesting?

Universal coverage will rise or fall based on the money. And right now, I worry, falling seems all too plausible. 

Update: Roll Call just reported that Finance has decided to postpone its markup until after the July 4 recess. Seems they need more time to work this all out.  

--Jonathan Cohn

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