CBO to declare $130 billion in deficit savings over first 10 years?
posted at 12:04 pm on December 19, 2009 by Ed Morrissey
Does this give Harry Reid the win?
One Democratic official said an analysis by the Congressional Budget Office to be released later Saturday would estimate a deficit savings of more than $130 billion over 10 years, and the possibility of much more in the subsequent decade.
Forecasters said the bill would expand coverage to roughly 94 percent of eligible Americans under age 65, a total that excludes illegal immigrants. The official who described the conclusions spoke on condition of anonymity, saying he lacked authorization to pre-empt the release of the report.
With Nelson’s decision, Obama’s Senate allies appear on track to pass the legislation by Christmas, overcoming unanimous Republican opposition and a swirling early winter snowstorm.
“This bill is a legislative train wreck of historic proportions,” Senate Republican leader Mitch McConnell of Kentucky said. He said it includes cuts to Medicare, home health care and hospices as well as “massive tax increases” at a time of double-digit unemployment.
We’ll need to see the actual CBO score. In the absence of full legislative language — the CBO had been working from a draft of a “managers’ amendment” — the final verdict will have to come later. However, if the CBO actually predicts larger deficit savings in the second decade, Reid is not likely to have too many more hurdles to get to his final floor vote.
That depends on a couple of points, however. As HA reader Geoff A notes, Congress will actually have to follow through on its $500 billion in Medicare cuts. The CMMS, Medicare’s actuary, sounded very skeptical of that in earlier analyses. It will also remain to be seen whether the CBO scored the so-called “doctor fix” that rescinded cuts to Medicare compensation as part of this bill. All of the Democratic scoring has relied on leaving those cuts in place — and then changing them later, which eliminates any deficit savings and puts ObamaCare back in the red.
The last hurdle might be the toughest, though. If the House does not adopt the Senate version in toto, then both chambers will have to vote on the conference report. And that may wind up creating all of the same problems all over again.
Update: Here’s the CBO letter, thanks again to Patriot Room:
I’m reading it now, and will have thoughts on it later.
Update II: Well, on page 10, CBO assumes some pretty hefty cuts in Medicare compensations. It cuts $186 billion from “most services” in the first 10 years, reducing Medicare Advantage payments by $118 billion, and payments to hospitals from both Medicare and Medicaid by $43 billion. It also includes a big rationing agency for Medicare:
The legislation would also include an Independent Payment Advisory Board, which would be required, under certain circumstances, to recommend changes to the Medicare program to limit the rate of growth in that program’s spending.
This is less of an issue without having the government competing with insurance companies, but it’s a rationing board nonetheless.
Update III: Lots of gimmicks remain, as another reader explains:
1) They just went whole hog on the physician payment gimmick — previous version said they’d allow the higher payments, then (unrealistically) allow for a cut afterward. This time they’re not even bothering with that gimmick — they’re pretending that the physician payments will go down by 21% in 2010, even though everyone knows that won’t happen. In other words, they squeezed more “savings” by extending the gimmick further. That will actually increase the cost of a parallel “doctor fix” bill.
2) Medicare payroll tax increase in the November legislation was 0.5% — this time around it’s 0.9% — they nearly doubled the rate of the increase.
Brian Faughnan also notes that the CBO won’t throw a flag on Congress if it reneges on these cuts, either.
Breaking on Hot Air