Health Care Reform Will Not Wreck the Budget

Perhaps the hysteria surrounding the new health care reform will soon begin to die down. But even then, what will remain is a huge, complicated piece of legislation. To get to its heart, you really have to proceed slowly, step by step, looking into different nooks and crannies. And you have to decide which guides you trust.

The Center on Budget and Policy Priorities, the liberal-minded Washington think tank, has been tracking the changing legislation as it made its way through Congress. So it knows something about the behind-the-scenes manuevering as well as what’s gone on in public. More importantly, the Center is the one think tank which has maintained a firm historic grasp of the shredding of the nation’s safety net over the years, closely paralleled by the growth in income disparities and numbers of poor and struggling Americans. It is conscious of how this sort of legislation actually affects people.

Note to Tea Party adherents: This is not some pinko outfit. It was started by people around Jack and Bobby Kennedy and managed by  public servants who actually ran government programs, and who call on others with the same backgrounds to help figure out what’s what. CBPP has proven year after year to be thoroughly credible. At least, that’s what I think, and that’s why I pay attention to what it has to say and cite it a fair amount of the time.

A new report from CBPP on the budget impact of the health legislation begins as follows:

Despite an official estimate by the Congressional Budget Office (CBO) to the contrary, some critics of the new health reform legislation — such as Rep. Paul Ryan and former CBO director and McCain campaign adviser Douglas Holtz-Eakin — charge that it will not reduce federal budget deficits because it relies on budgetary gimmicks or games. Careful analysis of these charges shows them to be misleading or inaccurate. They do not withstand scrutiny.

CBO estimates the legislation will reduce the deficit by $143 billion over the ten years from 2010 through 2019.  In the following decade, 2020 through 2029, it estimates that the legislation will reduce the deficit by an estimated one-half of 1 percent of gross domestic product (GDP), or about $1.3 trillion. CBO also anticipates that health reform “would probably continue to reduce budget deficits relative to those under current law in subsequent decades, assuming that all of its provisions continue to be fully implemented.

The report goeds on to examine the specific claims–i.e. falsehoods–about the legislation in detail. In particular, it debunks attempts at fearmongering among older people, with claims that the reform bill threatens Social Security. I’ve included some highlights, but you can find the full report here.

Claim: Health reform covers up long-term deficit increases by front-loading revenues and back-loading spending.

Fact: Health reform will reduce deficits in the legislation’s second ten years and in subsequent decades.

In claiming that health reform front-loads revenues and back-loads spending, critics selectively cite just a few provisions and fail to consider the legislation as a whole. The assertion that short-term gimmickry covers up long-term deficit increases is flatly contradicted by CBO’s assessment that the legislation will reduce the deficit in its second ten years and in subsequent decades.

Claim: The legislation uses revenues from Social Security and premiums from long-term care insurance to offset the cost of health reform.

Fact: Health reform reduces the deficit even without counting long-term care insurance premiums and additional Social Security payroll tax collections.

CBO and the Joint Committee on Taxation have concluded that the health reform legislation will reduce employer spending on health insurance, in part because the new excise tax on high-cost insurance plans will lead employers to shift some employee compensation from health insurance to cash wages. Workers will pay Social Security payroll contributions and income taxes on the additional wages.

The legislation also establishes a new, voluntary program of long-term care insurance, called the CLASS Act. Benefit payments from CLASS will be fully financed by premiums that beneficiaries pay and interest earnings. In its early years, as the program starts up, premium collections will substantially exceed benefit payments.

Congressional leaders crafted the health reform bill so that it would be fully paid for without relying on these additional Social Security payroll contributions or the CLASS Act premiums. The CBO estimate clearly shows that if one excludes the net revenues of $29 billion from Social Security contributions and $70 billion from CLASS Act premiums, health reform still reduces the deficit by $44 billion over the first ten years.

2 responses to “Health Care Reform Will Not Wreck the Budget

  1. sassygayfriend

    YouTube – Severe Autism: Cases That Require Extraordinary Help. The money invested in keeping kids like this WITH their families saves millions. Cost of out of home placements are 5x as much. Let’s try and keep disabled and elderly at home and give the families supports. It’s a win win situation!

    Disturbing video shows two caregivers working different shifts caught slapping, kicking, punching and shoving severely-autistic young man in California. Shows urgent need to reform way states supply families with in home caregivers. And how parents often must take steps to protect their loved ones from abuse by installing video surveillance. There is an epidemic of autism, and thousands of autistic adults are moving into community living settings, and yet few caregivers supplied by state agencies serving disabled are trained to handle autistic individuals with behavioral and health challenges. Laws were passed to bring autistic adults out of state institutions but there is very little being done to offer training or education to caregivers and nurses who work with these autistic adults once they live in community or go back home to live with families. This leaves group homes and families who handle this special population with a limited and often, as seen in this case, not so great pool of caregivers. What’s interesting is nursing and caregiver agencies say they are having a difficult time recruiting people who understand the severely autistic population. Apparently, this is a topic Autism Speaks doesn’t speak about. Nor do the agencies receiving millions to come up with proper supports for autism community.

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