Director, Policy Futures
Former Bush Administration official Charles Blahous has garnered some media attention by gussying up old, discredited arguments about the budgetary effects of health reform. But his paper adds nothing new to the debate.
Blahous claims the Congressional Budget Office’s cost estimate for the health reform law “double-counts” a considerable portion of the law’s Medicare savings. By subtracting these savings, Blahous asserts that — contrary to CBO — health reform increases the deficit.
But there’s no double-counting involved in recognizing that Medicare savings improve the status of both the federal budget and the Medicare trust funds. The outlooks for the budget and for the Medicare trust funds are two different things; some changes in law may affect one and not the other, but other changes affect both.
CBO estimates that health reform will modestly reduce the federal budget deficit. The Medicare actuary says that health reform will extend the solvency of the Hospital Insurance trust fund by eight years.
That’s no different than when a baseball player hits a home run: it adds to his team’s score and also improves his batting average. Neither situation involves double-counting.
CBO has accounted for deficit reduction in exactly the same way in previous Congresses, under both political parties. Until opponents of health reform latched onto the notion, no one accused CBO of faulty accounting.
For example, the Balanced Budget Act of 1997 and the Deficit Reduction Act of 2005 — both of which Republican Congresses approved — included Medicare savings that were counted as reducing the deficit and improving Medicare’s financial outlook. The Senate Republican Policy Committee rightly claimed credit for this result, and no one made charges of double-counting.
And, just last month, House Budget Committee Chairman Paul Ryan (R-WI) touted how his budget plan would both “shore up Medicare” and reduce projected deficits. No one discounted his Medicare savings because of supposed double-counting.