The Senate Finance Committee will soon take up Chairman Baucus’ health care reform proposal for consideration and amendment. The initial proposal as outlined September 17 was incomplete in many respects and a detailed evaluation is impossible. There was enough detail to provide a meaningful initial reaction .
The Congressional Budget Office (CBO) scoring of Chairman Baucus’s proposal highlights a crucial shortcoming – it represents a massive expansion in the size of government. The first fiscal policy test of any bill ought not to be whether it increases the deficit, though this is important, but that the bill not increase the size of government.
Deficit effects are important and so it is important that measures proposed to generate offsetting savings be legitimate and real. The Baucus proposal includes a number of significant changes to Medicare and Medicaid. Many of these may be meritorious. However, both Medicare and Medicaid are unaffordable in the current form. Spending under both programs is expected to far outstrip available resources, and so reductions in spending are welcome. However, cost savings from modest reductions that leave both programs unaffordable are not legitimate offsets to use for other spending. This is a fraudulent and dangerous shell game the Congress should not engage in.
Because deficit effects now and “in the future” as the President indicated are important, the CBO should provide detailed scoring of the Chairman’s mark and subsequent legislation prior to any vote being taken. Further, because these are long-term reforms introduced over some years and that are likely to evolve significantly over time it is vital the CBO provide detailed scoring over a 20-year period, not the usual 10-year period. Extended scoring of this sort is fraught with uncertainties about which the CBO is properly concerned. However, such projections can be made credibly, as the Lewin Group has demonstrated. The best CBO projections for all their weaknesses will provide far more information than no projections at all.
Finally, because the long-term fiscal health of the nation is in question, with unprecedented deficits in the near term and massive unfunded obligations in the long-run, the CBO must also provide its best estimate of the net deficit effects over the long run similar to the Trustee’s projections for Social Security and Medicare.
The Congress and the President are contemplating a massive restructuring of 1/6 of our economy in a way that will profoundly affect the federal budget for decades. The CBO should take the time necessary to provide all the information possible to lawmakers and the public to make the best decisions possible.
