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Health Care Debate: Were Medicare Savings Counted Twice?
Sen. Jeff Sessions is convinced they were …
Savings from Medicare touted by Democrats as a means to pay for the Senate health care bill were double-counted and the legislation will increase the deficit, not decrease it, a senior Republican senator said Wednesday, citing a new letter from the Congressional Budget Office.
I’m not inclined to give unwarranted credibility to FOX News or the GOP, but I thought this was a serious-enough allegation to click through to the actual CBO letter, or at least, the portion of that letter that Sen. Sessions’ staff posted to his Web site.
A lot of good that did me. I’m still confused. Here’s hoping that, by drawing attention to this matter, the Internet’s huddled masses can help fact check it. As of 12:30 p.m. ET, I didn’t see anything on Memeorandum that would help — and frankly, I didn’t have time to dig deeper.
So if you’re out there, understand these things better than I do, have a few minutes to spare, and know how to start the evaluation process — have at it. And please, share your results.
13 Responses to “Health Care Debate: Were Medicare Savings Counted Twice?”
I don't know what has made you so cynical as to think that spokespeople for the administration could have made a math error like that. I mean, these are the same people who put up the web site to track all of the jobs saved or created from the stimulus. And the newly elected representative from Maryland's 89th Congressional District assures me that the Medicare savings numbers are spot on.
The CBO letter said that counting the $245 billion in Medicare spending cuts AND the $113 billion in increased Medicare revenues, suggesting a $368 billion net improvement in Medicare's financial situation, would involve double-counting because any extra Medicare money is lent to the Treasury where it is presumably spent.
However, CBO's letter also said that the effect on the “unified” budget deficit (which includes all Federal government spending and revenues) would be an improvement of $132 billion. That means that the bill doesn't reduce the deficit by $368 billion; rather it only reduces it by $132 billion. That $132 billion figure doesn't have the double-counting problem.
Follow-up: notice the last line of CBO's letter: “To describe the full amount of HI trust fund savings as both improving the government’s ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings and thus overstate the improvement in the government’s fiscal position” (emphasis mine)
Note the wording: claiming that the $368 billion is net savings would “overstate the improvement in the government's fiscal position.” That is, the bill would still improve the government's fiscal position, but not by the full $368 billion. Rather, it is only the $132 billion.
I spent a few minutes looking at it but I have to admit I haven't grasped it yet (and I have spent quite a bit of time trying to understand previous CBO reports, so I'm trying to get my bearings on how this new development fits into that).
However, I have noted in the past the inconsistency in saying that these Medicare cuts make the Medicare system more fiscally sustainable, while at the same time we're told that these savings are going to help pay for new government programs. However, I was arguing against what I thought was just rhetoric. I hadn't realize that (if it turns out to be true) the CBO had actually fallen into the same fallacy.
Call Bernie, I bet he would understand it, and laugh approvingly at a larger Ponzi scheme than his.
“Call Bernie”
Or revive one of the earlier New York City mayors. Who knows, maybe Bloomberg as an alternate.
Hey, watch it fella, I just found out we are the most unhappy of all states. Could it be Jimmie Walker?
I am trying to understand comments by Galtin. I have the CBO clarification on double counting, the Nov 13 CMS report on the house bill, and the Nov 18 and Dec 19 CBO reports. I see the 132 B net deficit reduction, but I don't see the source of the data on the change in the position of the Medicare trust fund. Can you indicate where those numbers come from.
If I understand your point, the “clarification” from the CBO was just that, not an admission that the scoring of the Reid bill was in error. Moreover the 132B reduction in the deficit is still good data.
Along with happy vs. unhappy states, there are also states' growth rates and growth vs. loss this year.
(Michigan continues its bad news. Georgia is ready to replace Michigan soon, and North Carolina has already replaced its “sister” state in some ways, New Jersey, as I had anticipated some years ago.)
http://buffalo.bizjournals.com/buffalo/blog/the…
http://www.census.gov/Press-Release/www/release…
davidweinschrott:
I was using the numbers from CBO's website. Link here: http://cboblog.cbo.gov/?p=448
Although I did have a typo: I said $368 billion when I meant $358 billion (I added $245b and $113b incorrectly, and I ignored interest for simplicity's sake).
I posted the entire letter here http://yidwithlid.blogspot.com/2009/12/breaking… as well as a link to the PDF on the CBO Site
I've now had a chance to read the entire letter and it seems to me that the CBO is not saying that it made a mistake. It is just giving a clarification, which further underscores that the CBO number must be considered in context of the assumptions and rules that the CBO uses. This is just the latest example.
Whether the bill reduces the deficit or not depends on how you look at the deficit and the federal budget. If you count the Medicare trust fund as part of the federal budget, then the bill reduces the deficit because more money will go into the fund, and then some of that money is “borrowed” by the treasury to pay for new programs like the subsidies. This is the view the CBO takes when it says that the bill reduces the deficit, because more money goes into the fund than is borrowed from it.
On the other hand, if you don't consider the trust fund as part of the federal budget, then the bill does not lower the deficit because more money will be borrowed (thus increasing the deficit) from the trust fund. If you take this view, you can then argue that Medicare is being made more sustainable since more money is in the trust fund (which is then borrowed by the treasury, but that's irrelevant because they are obligated to pay it back).
I think it's reasonable that the CBO took the first approach, since their concern is with the entire scope of federal fiscal picture. This letter does not say that the CBO counted the money twice, but it does make clear that those who are saying that the bill both helps make Medicare more sustainable, and lowers the deficit, *are* counting the money twice. It does not do both. That is an important point to make because it undercuts liberals who have been attempting to sway seniors by saying “Don't worry. We are making some cuts, but it will make Medicare more sustainable”.
(I really wish the Republicans wouldn't overstate their case by saying that the CBO has double-counted the money. It just causes more confusion and the real point, which still supports their case, will end up getting lost in the debate.)
(yeah, it's weird that I replied to myself. For some reason disqus wasn't seeing me as logged in unless I did it this way).
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