Q & A with Jim Horney on Health Reform and the Deficit, Part 3
This Q & A is part three in a series on myths about health reform and its impact on the federal budget deficit with Jim Horney, our director of federal fiscal policy.
1. Jim, some opponents of the new health reform law claim that it is financed with a number of gimmicks and as a result will increase the federal deficit. We’ve looked at each claim of budget gimmickry and found each one misleading or inaccurate. Today we’re focused on a particular claim: that the health reform law’s Medicare savings are meaningless because whenever Congress enacts Medicare savings, it later cancels them before they take effect. Is this true?
No, it is absolutely false. This is one of those myths that gets repeated and repeated until everyone thinks it’s true. But it’s not.
Congress has repeatedly adopted measures to produce very substantial savings in Medicare and has let them take effect.
2. And you actually looked back at the history of such measures and found that to be the case?
That’s exactly right. We examined every piece of major Medicare legislation enacted in the last 20 years and found that Congress has allowed the overwhelming majority of cuts in Medicare to be implemented.
And that’s actually fairly amazing, because in that case there were extraordinary circumstances. The year after the 1997 legislation was enacted the budget was balanced – four years before the scheduled date. And in addition in 1999, Medicare spending actually went down. The conclusions we’ve reached about Medicare cuts have not been challenged because they are a matter of historical record. Unfortunately, that hasn't stopped critics from ignoring the record and continuing to assert that "Medicare cuts don’t stick." In fact, they do!
Four pieces of legislation included significant Medicare savings. Virtually all of the Medicare savings in three of those pieces of legislation — the 1990, 1993, and 2005 budget reconciliation bills — were successfully implemented. In addition, nearly four-fifths of the savings enacted in the fourth piece of legislation — the Balanced Budget Act of 1997 — were implemented.
Listen to the podcast of this conversation, the third in a series on health reform myths and realities (or find it on iTunes). To learn more about the new health reform law, check out our special series “Moving Forward with Health Reform.”