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CBO Yet Again



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President Obama and the congressional leadership must be getting very tired of the Congressional Budget Office. Rich links to a good Ed Morrissey post on the CBO’s latest blow for truth in the health care debate. It’s worth emphasizing how important this new letter is.

The document is a response to a request from Rep. Dave Camp (the ranking Republican on the House Ways and Means Committee) for an assessment of the long-term costs of the health care bill the House Democrats have proposed. CBO repeats its assessment that the House bill would add about a quarter of a trillion dollars to the deficit over the next ten years (even though it would not even go into effect for several years), but then, looking beyond that period, comes the real kicker (I’m quoting from page 12 of the letter):

Looking ahead to the decade beyond 2019, CBO tries to evaluate the rate at which the budgetary impact of each of those broad categories would be likely to change over time. The net cost of the coverage provisions would be growing at a rate of more than 8 percent per year in nominal terms between 2017 and 2019; we would anticipate a similar trend in the subsequent decade. The reductions in direct spending would also be larger in the second decade than in the first, and they would represent an increasing share of spending on Medicare over that period; however, they would be much smaller at the end of the 10-year budget window than the cost of the coverage provisions, so they would not be likely to keep pace in dollar terms with the rising cost of the coverage expansion. Revenue from the surcharge on high-income individuals would be growing at about 5 percent per year in nominal terms between 2017 and 2019; that component would continue to grow at a slower rate than the cost of the coverage expansion in the following decade. In sum, relative to current law, the proposal would probably generate substantial increases in federal budget deficits during the decade beyond the current 10-year budget window.

In other words, it’s the familiar picture of exploding entitlement costs. Part of the case the Democrats have tried to make for their approach has been that although it might cost a lot early on, over time it would “bend the cost curve” and bring health-care costs under control. CBO says it simply wouldn’t — in fact, those costs would rise faster than they are rising now, and we would find ourselves with an added entitlement burden growing even faster than current-day health-care costs are growing. And for that we would have to accept higher taxes, more bureaucracy, and more centralized health-care rationing.

This makes the ongoing mad dash to find a way to make the bill look deficit neutral within a ten-year budget window seem silly. Even if they can patch together enough tax increases and promised Medicare cuts to offer that appearance, the champions of Obamacare are setting us up for a new unsustainable entitlement and proposing it as a solution to the cost of the old unsustainable entitlements of Medicare and Medicaid.

For Hill budget hawks, this is probably the most damning indictment yet of the Democratic health-care bills.



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