CBO: Pelosi plan increases deficits $89 billion in first ten years
posted at 2:16 pm on November 19, 2009 by Ed Morrissey
Whoops! The Congressional Budget Office has contradicted Democratic claims that the new ObamaCare bill will reduce the deficit, even in the first ten years of the program. A letter to Rep. Paul Ryan explodes the deficit myth and categorically states that Democratic policies will add to the national debt, and do so almost immediately as well as in the foreseeable future. The CBO considered the “doctor fix” that has already passed the House and is backed by the White House as part of their calculations (emphases mine):
The Budgetary Impact of Enacting Both H.R. 3961 and H.R. 3962
Under current law, including the new rule, Medicare’s payment rates for physicians’ services will be reduced by about 21 percent in January 2010, and CBO estimates those payment rates will be reduced by about 2 percent annually for several subsequent years. H.R. 3961 would increase those payment rates by 1.2 percent in 2010 and restructure the SGR beginning in 2011. Those changes would result in significantly higher payment rates for physicians than those that would result under current law. CBO estimates that enacting H.R. 3961, by itself, would cost $210 billion over the 2010–2019 period.
H.R. 3962, the Affordable Health Care for America Act, would establish a mandate for most legal residents of the United States to obtain health insurance, set up insurance “exchanges” through which certain individuals could receive federal subsidies toward the purchase of such insurance, and make numerous other changes in the health insurance system, in federal health care programs, and in the federal tax code. CBO and the staff of the Joint Committee on Taxation estimate that enacting H.R. 3962, by itself, would reduce federal budget deficits by $109 billion over the 2010–2019 period through its effects on direct spending and revenues.
CBO estimates that enacting both H.R. 3961 and H.R. 3962 would add $89 billion to budget deficits over the 2010–2019 period. That amount is about $12 billion less than the sum of the effects of enacting the bills separately. The $12 billion difference results from two types of interactions. The higher payment rates for physicians’ services under H.R. 3961 would increase the net cost of provisions in H.R. 3962 by about $3 billion. However, that difference would be more than offset by the effect of a change under H.R. 3962 in how payment rates for Medicare Advantage plans are set. That change would reduce the effect of the changes made by H.R. 3961 to Medicare’s payments for physicians’ services in the fee-for-service sector on payment rates for Medicare Advantage plans. As a result, the estimated increase in payments to Medicare Advantage plans would be $15 billion smaller if both bills were enacted than under H.R. 3961 alone.
This shows the dishonesty of both Reid and Nancy Pelosi in attempting to hide the doctor fix from the CBO in the first place. Pelosi got away with it only because she snuck the Doc Fix in the rules debate rather than the bill itself. Reid attempted to do the same thing earlier but couldn’t get 60 votes for cloture on the attempt. As a result, the CBO scored both components separately and together — and it adds up to even more red ink, not deficit reduction.
And it gets worse in the second ten years, as the CBO explains:
The agency estimates that the two bills together would cost about $32 billion more in 2019 than H.R. 3962 alone and that the combination of the two bills would increase the budget deficit in 2019 by $23 billion relative to current law. Those increments would grow during the following decade. As stated in its October 29, 2009, letter to Congressman Charles B. Rangel, “CBO expects that [H.R. 3962] would slightly reduce federal budget deficits in that decade relative to those projected under current law—with a total effect during that decade that is in a broad range between zero and one-quarter percent of GDP [gross domestic product].” If both H.R. 3961 and H.R. 3962 were enacted, CBO expects that federal budget deficits during the decade following the 10-year budget window would increase relative to those projected under current law— with a total effect during that decade that is in a broad range between zero and one-quarter percent of GDP.
If GDP is around $12 trillion, then the CBO estimates a deficit as high as $30 billion a year on average, or $300 billion, in the second decade.
Update: I should have used “contradicted” rather than “repudiated” in the first sentence. Also, when will we start seeing the media report on the deficit increases under ObamaCare? The national media seemed pretty quick to accept Reid’s claim that it would not raise the deficit. Will they scold Reid for misleading them?
Update: Steve Eggleston points out that the plan the CBO scored was Pelosi’s, not Reid’s, as I originally wrote. I’ve changed the title and the beginning of the post to reflect that.