I just noticed a brief passage in a Bryan Walsh post at Time:

Now there’s evidence from the Congressional Budget Office (CBO) that the main greenhouse gas reduction tool—carbon cap and trade—isn’t that costly for the government. In a preliminary look at the American Power Act—the climate legislation that has been put forward by Senators John Kerry and Joseph Lieberman—the CBO found that the bill would actually reduce the budget deficit by about $19 billion over the 2011 to 2020 period. The CBO estimates that auctions of carbon allowances under the bill—which requires companies to essentially pay for the right to emit carbon dixoide—would raise government revenue by about $751 billion, more than bill would hike government spending through incentives for nuclear power, tax credits for energy efficiency and research and technology for new energy. [Emphasis added.]

We’ve discussed how to think about scoring, so I won’t rehash my caveats and quibbles here. I will say, however, that the relevant question shouldn’t be whether cap-and-trade is costly for the government; rather, it’s the impact on the broader economy. And here there is considerable dispute, with advocates of APA believing that the bill will lead to enhanced efficiencies, etc., and skeptics believing that it will have a deleterious impact on household budgets and employment levels.

PPACA raises similar issues. Austin Frakt highlights a post by Uwe Reinhardt at Health Affairs on how health reform will impact costs for private insurers. Basically, Reinhardt observes that the legislation is designed to encourage more competition among private insurers in local markets and more consolidation of providers. Frakt’s reaction is as follows:

I can think of no sensible argument that–holding all else constant–starts with a reduction in insurers’ market power and ends with a decrease in medical costs and health care premiums. However, if one is willing to add in other elements of reform, I can think of some possibilities that include increased insurer competition. For example, if insurers are permitted to collude to set all-payer rates to medical providers then they can maintain a high degree of leverage over providers while competing vigorously for policyholders. Or, the provider market could be commensurately diluted so that the relative provider-insurer balance of power was held constant.
Do you think for a second either of those things will happen (all-payer rates setting or the break up of dominant hospitals)? I don’t either. If insurers can’t constrain medical costs in the private health care market we’re likely to get, what will? This question has not yet been answered or even sufficiently debated.

Frakt is right — all-payer rates are unlikely, though one path to all-payer rates might be a public reinsurance plan along the lines of Harold Luft’s Major Risk Pool.

In light of Frakt’s modal scenario, I tend to think the reform we need is a series of regulatory tweaks that will facilitate business-model innovation. It’s less important that providers consolidate per se than that we see more specialization, with focused solution shops emerging to do a narrow range of tasks cheaply and well while diagnostic centers are freed to specialize as well. The fixation on ACOs elides these finer distinctions.