As featured on p. 218 of "Bloggers on the Bus," under the name "a MyDD blogger."

Wednesday, September 16, 2009

Kent Conrad Killing Health Reform?

When I first read this story about Kent Conrad increasing the budget window for health care reform to 20 years, I thought it would actually help the cause. Most experts predict that the savings would come in the later years, and so those could be built into the reform from the start, producing a favorable budget score. Then I thought about how the CBO was unlikely to measure savings 20 years down the road, and typically in those cases they punt and score them as zero. Which means that the outlook would appear far worse in a 20 year window than in a 10 year one. And the President has vowed deficit neutrality in the bill. So this would mean that, if the President and the Congress adhered to CBO numbers, some substantial increase in revenue or cut to the overall cost of the bill in the short term. Ezra Klein has more.

In other words, he thinks the CBO is underestimating the savings that reform will deliver, but he wants to see those savings underestimated over a longer period of time, which will make the total gap between the revenues the CBO predicts and the savings it misses appear larger. It's a bit like the restaurant review from "Annie Hall": The food was terrible, and such small portions!

The end result is likely to be a new hurdle for health-care reform: a CBO report that makes the bill's total cost sound higher, as it's measured over 20 years, and its savings seem smaller, as they're underestimated over 20 years. The Huffington Post caught up with Conrad and asked him whether this would kill the reform effort. "No," he replied, "but it makes it more challenging." The question is why Conrad wants to make health-care reform more challenging.

This is the same Kent Conrad who voted for the Medicare Modernization Act in 2003, which added $600 billion dollars to the deficit and was financed with nothing but debt.

There are three possibilities for this. One is that the 20-year projections will look bad, but not as bad in Max Baucus' bill, and Conrad is just putting his thumb on the scale for it. Two is that Conrad wants to embarrass the Congressional Budget Office in 20 years, which doesn't make sense because the CBO Director was a close colleague in the Gang of Six meetings, and also Kent Conrad isn't likely to be alive in 20 years. Three is that Conrad is just a bastard who senses health care reform slipping away from his grasp and wants to drive a stake through it.

I don't know what I vote for yet. I do know that it's time to end the tyranny of Congressional Budget Office numbers. For certain things they do a good job. For long-term projections they are admittedly conservative and uncertain, and when they don't have a clear answer, they assume zero, which distorts potential savings. The Institute of Medicine thinks the CBO is misreading the numbers and wants their numbers to take precedence.

The U.S. can cut health-care spending by $250 billion a year within a decade, a congressionally chartered panel will say this month in a bid to show costs can be contained even if all Americans are insured.

A report from the Institute of Medicine, which advises the federal government on health care, will counter “stingy” estimates from the Congressional Budget Office, said Arnold Milstein, planning chairman of the institute’s working group on health costs. The panel’s annual figure is five times the amount the budget office says the U.S. will save under a bill in the House of Representatives, according to the budget office’s July 17 letter to House Ways and Means Committee chairman Charles Rangel.

The preliminary findings from the institute, part of the National Academies in Washington, will be issued amid a growing debate over the health-care overhaul proposals that President Barack Obama is urging Congress to pass. The report will help bolster the argument that covering the nation’s 46 million uninsured won’t bust the budget, advocates of the bill say.

“The institute will make it very clear that we are right,” said Senator Benjamin Cardin, a Maryland Democrat who backs health legislation because he says it will save money. “It gives us the lift we need and the encouragement to say, ‘We’re right to do this.’”

The CBO numbers set the benchmark in Washington. But there is no balanced budget amendment, so their numbers don't carry major import. They're just what media and politicians use to identify the costs and savings in bill. It's not etched in stone, and as the Institute of Medicine shows, it can frequently be wrong.

Maybe this is part of Kent Conrad's devious plan. But more likely, he's one of these fiscal scolds who only come out under a Democratic President to thwart a progressive agenda.

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