double count


Obamacare Remains a Budgetary and Policy Disaster

I have a new issue brief at the Heritage Foundation on the CBO’s updated cost estimate for Obamacare after the recent Supreme Court decision, and what CBO’s assessment leaves out.

CBO now projects that Obamacare’s Medicare and Medicaid cuts will reduce federal spending by over $700 billion over the coming decade. (Most of the cuts come from Medicare, although CBO did not break the estimate down by program.) However, these cuts are being double-counted. The cuts are being used to replenish the Medicare trust fund for hospital and other institutional care and pay future Medicare claims. Over the next 75 years, this will add about $8 trillion to the government’s unfunded liabilities. Over the next decade, when the double-counted cuts are taken out of the equation, Obamacare adds at least $340 billion to projected budget deficits.

You can read the rest of the brief here.

posted by James C. Capretta | 12:27 pm
Tags: CBO, double count

Exposing the Medicare Double Count

Charles Blahous and I have a new column in the Wall Street Journal on how Obamacare tries to double-count certain revenue to twist its budget figures:

One of the enduring mysteries of President Obama's health law is how its spending constraints and payroll tax hikes on high earners can be used to shore up Medicare finances and at the same time pay for a massive new entitlement program. Isn't this double counting?

The short answer is: Yes, it is. You can't spend the same money twice. And so, thanks to the new health law, federal deficits and debt will be hundreds of billions of dollars higher in the next decade alone....

You can read the rest of our explanation of the Obama administration’s fiscal obfuscation here.

posted by James C. Capretta | 3:05 pm
Tags: Obamacare, Medicare, double-count
File As: Health Care

The Medicare Trustees’ Report and the $8.1 Trillion Double Count

I have a new post up at the Weekly Standard blog on the recently released 2012 Medicare and Social Security trustees’ reports:

The other important story with respect to Medicare’s finances isn’t covered at all in the trustees’ report.... That’s the double counting of Medicare tax hikes and spending cuts in the Obamacare legislation.

Earlier this month, Chuck Blahous, one of two public trustees for the Medicare program, brought renewed attention to this subject when he released a paper documenting the double count and quantifying its impact on the federal budget. According to Blahous, when cost estimates are adjusted to remove the effects of double counted Medicare “savings” provisions, Obamacare increases the deficit by as much as $530 billion over ten years....

You can read the rest of post here, and see the trustees’ reports here and here.

posted by James C. Capretta | 11:15 am
Tags: Medicare, double-count, Medicare Trustees
File As: Health Care

Discussing Medicare

Yesterday, I had the pleasure of participating in a forum at the American Enterprise Institute entitled “The Future of Medicare: A Reality Check.” The session focused on the 2012 Medicare Trustees’ Report and began with a presentation from Richard Foster, the Chief Actuary of the Medicare program. I was joined on the panel by Norm Ornstein of AEI, Bob Reischauer of the Urban Institute, Gail Wilensky of Project Hope, and Wendell Primus, who is a senior advisor to House Minority Leader Nancy Pelosi. (The event video can be found here).

I focused my comments on what I called the $8.1 trillion Medicare double count in Obamacare (the subject of my most recent blog post).  My remarks precipitated a mini-debate with Wendell Primus over the issue; in the video linked above, that part of the session begins at about the fifty-minute mark.

Our panel was preceded by remarks from Senators Tom Coburn and Richard Burr on their Medicare reform legislation.

posted by James C. Capretta | 5:33 pm
Tags: Medicare, double-count, Medicare Trustees, Richard Foster, Robert Resichauer, Wendell Primus
File As: Health Care

Doubling Down on the ‘Double Count’

Just after the new year, the Obama administration and its congressional allies tried to convince the press that passage of a health-care bill should be relatively easy and quick, because the House- and Senate-passed versions have so much in common.

Oh, really? You wouldn’t know it by listening to House liberals this week.

They are up in arms over talk that they will have no choice but to swallow hard and accept something very close to the Senate-passed bill. Their list of grievances with the handiwork of the upper chamber is rather long. For starters, they still haven’t gotten over the fact that Senate Democrats endorsed an “individual mandate” with no government-run option for people to choose. If that position prevails, House Democrats are facing the prospect of voting for legislation that would force Americans to buy coverage from the despised private insurance industry. It’s going to take many Democrats some time to work through the grief associated with that reality before they reach acceptance.

Then there is the president’s endorsement of the so-called “Cadillac tax” in the Senate bill. That’s the 40 percent excise tax that would apply to insurance plans with premiums exceeding $23,000 for family coverage. It turns out that the most expensive health-insurance plans in the United States are often provided to unionized workers. So, with this one idea, the president can kill two campaign promises with one flip-flop. He would be “taxing health benefits for the first time in history” — something he condemned John McCain for endorsing in 2008 — and he would impose hefty new taxes on the middle class. Even House Speaker Nancy Pelosi seems taken aback by this presidential display of audacity.

But House liberals have other complaints too. They also don’t like the independent Medicare commission that could make an end run around Congress to impose cuts in the program without further action in the House or Senate. Or the Senate’s employer mandate that penalizes firms only if their low-wage workers end up with subsidized coverage, thus discouraging the hiring of the very people who most need a job. Or the modest nod toward federalism in the Senate bill’s delegation of exchange administration to the states. It’s going to take time to work through these issues, all of which have the potential to disrupt the fragile coalitions assembled in the House and Senate to pass the original bills.

Indeed, for many of these items, it’s not clear that a simple “split the difference” formula will work to keep enough Democrats on board for final passage. Which is why entirely new ideas are now being floated — ideas that weren’t even considered during the year-long debate of 2009.

The latest is the proposal to impose Medicare payroll taxes on non-wage income, such as investment returns. This has been mentioned as a way to ease up on the Cadillac tax without resorting to the income-tax surtax in the House-passed bill. Of course, this is terrible policy for a whole host of reasons. It would penalize private-sector investing — putting up one more stumbling block to robust growth and job creation. And it would break the historic link between wage income and social insurance that has been a central pillar of Social Security and Medicare from the beginning.

But what’s most stunning about this latest idea is that it completely disregards the warning the Congressional Budget Office (CBO) issued regarding the Medicare provisions just before Christmas. In that better-late-than-never analysis, CBO made the point that Medicare spending and revenue provisions can’t be counted twice. They can be used either to improve the capacity of the government to pay future Medicare benefits, or to finance a new entitlement program. But the same money can’t be counted twice.

But with this latest idea, the Democrats have made it clear that they don’t care what CBO or anybody else says at this point, they plan to keep counting the money twice. If this new Medicare payroll tax on investment income were to pass, Congressional Democrats would double-count the revenue just as they are double-counting the Medicare spending cuts — saying they help improve Medicare solvency even as they also pay for the runaway entitlement spending in Obamacare.

It’s been clear for some time that the White House will say and do anything to get a bill, which is why the process of producing this legislation has been become so ugly and distasteful to the public. Unfortunately, it’s only going to get worse in coming days as desperate Democrats pull out all the stops to pass a government takeover of American health care.

posted by James C. Capretta | 8:40 pm
Tags: double count, Cadillac tax, CBO
File As: Health Care