Megan McArdle on the Healthcare CBO Report

First Thoughts on the CBO Score

…the CBO process has now been so thoroughly gamed that it's useless.

…The proposed changes increase spending dramatically, most heavily concentrated in the out-years…The net cost has increased even more dramatically, from $624 billion to $794 billion. 

That's because the excise tax has been so badly weakened.

…the one provision which had a genuine shot at "bending the cost curve" in the broader health care market has at this point, basically been gutted. 

…Medicare Advantage is being effectively outlawed--in some areas, the reimbursements will actually be below those of the fee-for-service programs.

A disturbingly high percentage of the revenues still come from insurance premiums for other programs.  About $53 billion of the net deficit reduction is from Social Security taxes collected on the wages people will now be getting in lieu of health care benefits.  But since those contributions raise the amount Social Security will eventually have to pay out, the Republicans convincingly argue that this is not true "deficit reduction"; it's just deficit shifting.  Ditto the premiums for the new long-term care insurance.

Ultimately, this rests on the question: are we really going to cut Medicare?  If we're not, this gargantuan new entitlement is going to end up costing us about $200 billion a year next decade…

There are offsetting taxes, but they're either trivial or likely to be unpopular--look forward to a 4% rent increase when your landlord has to stump over the same amount for the new tax on rents.  Then look forward to repeal of same.

I think this is a fiscal disaster waiting to happen. 

But no one on the other side cares, so I'm not sure how much point there is in saying that any more.

Megan McArdle
The Atlantic