This just in: Both Sides of Health Reform Debate Twist Facts to Support Own View. Public Shocked!
Posted by Nolan Miller on Jan 25, 2011
Filed Under (Health Care, U.S. Fiscal Policy)
Of course, we all knew this. But, the Washington Post had a couple of interesting op-ed pieces last week that really drove home the point. The fun part was that the two pieces, written by Charles Krauthammer and Eugene Robinson, appeared next to each other on my computer screen and exposed the disingenuousness of both the Democratic and Republican positions on the financial aspects of the Patient Protection and Affordable Care Act, aka “ObamaCare,” or, more neutrally, PPACA.
Let’s begin with Robinson, who takes aim at the Republican’s self-serving and somewhat hypocritical approach to the numbers in promoting their repeal of PPACA through the ominously-named “Repealing the Job-Killing Health Care Law Act.” Now, the Republicans painted themselves into a bit of a corner on this one from the get-go. Swept into the House majority on a promise to decrease the deficit, they were faced with the fact that PPACA, at least on paper, lowers the deficit over the next 10 years. The fist bit of Republican tap dancing around this point came earlier this month when the new majority enacted new rules in the House specifying that every new law had to explain how any new spending it proposed would be offset by an equivalent cost reduction. Deficits, after all, are bad. This “cut-as-you-go” rule, however, specifically exempted PPACA repeal from this requirement. So, I guess deficits aren’t all that bad after all.
According to Mr. Robinson, the Republicans, faced with the CBO’s projection that repealing PPACA would increase the deficit by $143 Billion over the next decade, took the position that the CBO “score” for the bill was disconnected from reality. According to House Budget Committee Chairman Paul Ryan, “CBO scores what is put in front of them – and what Democrats put in front of them last year was legislation packed with smoke and mirrors to hide the impact of trillions of dollars in new spending.” On the other hand, Republicans are putting a lot of faith in the CBO when they declare PPACA to be “job-killing,” saying it would eliminate 650,000 jobs. But, according to Robinson:
“One problem, though: The CBO analysis contains no such figure. It’s an extrapolation of a rough estimate of an anticipated effect that no reasonable person would describe as “job-killing.” What the budget office actually said is that there are people who would like to withdraw from the workforce – sometimes because of a chronic medical condition – but who feel compelled to continue working so they can keep their health insurance. Once the reforms take effect, these individuals will have new options. That’s where the “lost” jobs supposedly come from.”
So, Republicans are not above picking and choosing which numbers to ignore and which to exaggerate to make their point. On to the Democrats.
Krauthammer takes on the Democrats’ cooking the numbers in the original PPACA bill in order to make it look like it reduced the deficit when it will actually add to the deficit (i.e., new expenditures will be greater than new revenues in the long run). Now, cooking the CBO’s score is a time-honored practice in Washington. The key is this. The CBO is the most gullible body in the government. By law, they are required to take whatever Congress puts into a bill and score it as if it is actually going to happen. So, if Congress tells them that they are going to spend $50 billion on a bridge to Hawaii and pay for it by taking all of Bill Gates’ money, CBO will come back and say “awesome. That will reduce the deficit by $4 billion.” As I said, this is nothing new. Remember how the Bush Tax Cuts were scheduled to expire at the end of last year? Same deal.
So, to cook the books on PPACA, the Democrats did the following. The new taxes and revenue sources for health care were scheduled to start coming online almost immediately, while the new expenditures were scheduled to start much later. So, according to Mr. Krauthammer, “the entitlement [PPACA] creates – government-subsidized health insurance for 32 million Americans – doesn’t kick in until 2014. That was deliberately designed so any projection for this decade would cover only six years of expenditures – while that same 10-year projection would capture 10 years of revenue. With 10 years of money inflow vs. six years of outflow, the result is a positive – i.e., deficit-reducing – number. Surprise.” And, Krauthammer argues, PPACA does the same with its new long-term care insurance program, where it starts collecting premiums immediately but doesn’t pay anything out for 10 years, resulting in a surplus, at least on paper, according to the rules.
Krauthammer also makes the additional point that although PPACA is supposed to decrease the budget by $230 billion (the numbers differ between the two articles), the way it does it is through offsetting $540 billion in new spending by $770 billion in new taxes. This “radical increase in spending, topped by an even more radical increase in taxes” is probably not what most people had in mind when they heard that the bill reduced the deficit by $230 billion, and certainly much different than simply cutting $230 billion in government spending. But, that’s perhaps a topic for a different day.
So, both sides are twisting the numbers and sloganeering. Am I shocked like Claude Rains in Casablanca? Well, I guess I am, which is to say, not shocked at all. Am I frustrated? Definitely, because there are real problems in health care that have to be addressed. Even if you are a fan of PPACA, you have to admit that it was at most a first step toward reforming health care in this country. Real progress is going to require cooperation on coming up with solutions. As long as both sides are deliberately twisting the facts to score political points, we aren’t going to make progress.
Despite the Republican’s grandstanding on the issue of repealing PPACA, it’s not going to happen. There is a glimmer of hope. Along with the political theater, Republican leaders in the House are instructing committees to get to work on legislation to replace PPACA. Without Democratic support, such legislation will never become law. But, maybe, just maybe, if the two work together, they can come up with something that actually improves on PPACA and begins to work on the excessive growth rate of health care costs in this country, which is what I and many others have said is the real ticking fiscal time bomb facing this country.
Two complaints :
Representing Democratic and Republican missteps in this matter as equivalent is not correct. The real and very serious issue is whether PPACA reduces the deficit or adds to it. The Democrats are so devoted to their vision of health care that they are determined to obscure the economic dangers.
It was Claude Rains, not Peter Lorre.
On complaint #2, you care, of course right. Thanks for pointing it out.
On complaint #1, I’m going to stick by my guns. It gives both sides too much credit to call what they’re doing missteps. In both cases, they’re intentionally distorting the truth to score political points at the expense of engaging in serious debate on this critically important issue. I wasn’t trying to decide which side is worse. In my mind, they’re both dropping the ball.
Finally, let me respond to your contention that the real issue is whether PPACA reduces the deficit or not. In my mind, the question with this (and every policy) is whether the benefits of the policy outweigh the costs and whether, compared to other uses of government money (or leaving the money in the hands of taxpayers), PPACA gets more “bang for our bucks.” If this is the right question to ask (and I believe it is always the right question to ask, at least for an economist), then the dissembling that both sides are doing is a real disservice to the country. (Incidentally, the Republicans deserved some respect for their position on the deficit. They were, in effect, saying that increasing the deficit is always bad. That is, of course, until the exempted the PPACA revocation from the requirement to show how it reduces the deficit. So much for principles (not that the Democrats are any better in all of this).
I believe that if PPACA is implemented according to plan:
1. In the long run, steady state, PPACA will increase health care costs and the additional cost will be greater than the additional revenues associated with the law. Further, since PPACA doesn’t do much to curb cost growth, the gap between costs and revenues is likely to grow over time. Deep down, both sides know this.
2. PPACA will increase the number of people with health insurance in this country. This will occur through expansion of Medicaid and through the reforms to the non-group and small group insurance markets. Deep down, both sides know this.
3. PPACA will affect employment, but it is not clear how. (Although the Republicans focus on jobs eliminated because the increased cost to employers of providing health insurance to employees and otherwise complying with the law (e.g., the onerous 1099 requirements), it will also increase health care utilization, which will increase employment in that sector, and promote health IT, which may also create jobs). I’m not sure anybody really has a good sense of the overall employment effects of the bill.
4. The bill introduces some risk into the private health insurance system, especially if the individual mandate is declared unconstitutional or the penalties are insufficient to induce people to choose to purchase insurance. So, PPACA poses risks to the system as we know it. On the other hand, the “system as we know it” was in trouble before PPACA. So, the question here is whether PPACA increased or reduced the overall risk to the system. Here, again, I think that we didn’t understand how close the system was to collapse prior to PPACA, and we don’t really know whether PPACA will make things better or worse.
5. My personal pet peeve, PPACA doesn’t do much to slow the rate of cost growth in health care, and it is clear that the current trajectory is not sustainable.
So, PPACA has costs and benefits. If the Republicans want to stand up and say the costs outweigh the benefits, or if the Democrats want to stand up and say the benefits outweigh the costs, I’m happy to listen (to both sides). What I object to is cherry-picking and distorting one or two facts without providing a coherent overall argument. My point in the post was that both sides are guilty of this.
Bill … I should have added my thanks for your comment.