Reform in Health Reform? Maybe Not So Much…

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Sigh.

So yesterday, I wrote this post saying that the new version of the Senate bill does more to “bend the curve” of health care costs. I based that in large measure on the Congressional Budget Office analysis of the how effective a new independent board to regulate Medicare would be.

Except CBO got it wrong, at least partly. The independent board would still act as a brake on health care costs–but not as strong a one as CBO initially estimated, not over the long run. Today, CBO Director Douglas Elmendorf put out a new analysis:

The Congressional Budget Office (CBO) has discovered an error in the cost estimate released on December 19, 2009, related to the longer-term effects on direct spending of the manager’s amendment to the Patient Protection and Affordable Care Act (PPACA), Senate Amendment 2786 in the nature of a substitute to H.R. 3590 (as printed in the Congressional Record on November 19, 2009).
Correcting that error has no impact on the estimated effects of the legislation during the 2010–2019 period. However, the correction reduces the degree to which the legislation would lower federal deficits in the decade after 2019.

The confusion centers on what would trigger the independent board to act to bring down spending. It turns out that, after 2019, it isn’t as much of a hair trigger as CBO thought it was :

In its original estimate, CBO wrote that: “Such recommendations would be required if the Chief Actuary for the Medicare program projected that the program’s spending per beneficiary would grow more rapidly than a measure of inflation (the average of the growth rates of the consumer price index for medical services and the overall index for all urban consumers).” That statement is correct for fiscal years 2015 through 2019. After 2019, however, the threshold for Medicare spending growth that would trigger recommendations for spending reductions would be higher—specifically, the rate of increase in gross domestic product (GDP) per capita plus 1 percentage point.

Originally, CBO thought the legislation would produce savings of 15% a year in the Medicare program. Now, it says that the savings are likely to be somewhere between 10% and 15% a year. (Although it also noted that even this is “somewhat larger” than the savings projected under Reid’s initial version.)

CBO also cautioned, as it has in the past, that any projections a decade and more into the future have an “even greater degree of uncertainty that attends to them, compared with CBO’s 10-year budget estimates.”

No kidding. It does make you wonder what else they are going to find in the bill.

UPDATE: It’s probably worth reminding our readers that this is not the first time that CBO has found itself out of the loop regarding provisions of this bill. Interestingly enough, this earlier episode involved the same commission. Which raises a more worrisome question: If CBO can’t keep up with what is getting slipped into this bill, what hope is there for the rest of us?

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