Discussion of an article on the costs of the Senate's health care reform bill.
Late last night I was doing some research on the Senate's health care bill. In looking up information on the cost of the bill, I came across a Reuters blog with the claim that Sen. Sessions and Sen. Gregg have accused the CBO of accounting tricks regarding the projected deficit with the Senate plan. They are "accusing the Democrats of double-counting Medicare tax hikes and spending cuts as both extending the solvency of the program and paying for expanded health care coverage."
James Pethokoukis, the blog's author, argues that:
Me: Basically, the government is taking money out of Medicare’s Hospital Insurance trust fund, replacing it with IOUs and then spending it. But the CBO doesn’t score such intra-governmental transfers as the same sort of debt as when a Treasury bond is issued. But it is an obligation just the same. If not for this accounting quirk, the Senate health bill seemingly would be scored as increasing the budget deficit by $170 billion or so over the next decade (itself a funny number since taxes come first, then benefits) instead of cutting the deficit by $130 billion. This is a similar shell game played by the government when it uses Social Security surpluses to mask the true depth of the budget deficit. I don’t see how supposed Dem budget hawks like Mark Warner and Kent Conrad and Evan Bayh can go along with this. This is just as bad as the shunting $250 billion in doctor payments into a different bill to hold down the official cost of ObamaCare.
He claims the Center for Medicaid and Medicare Services makes a similar argument, as does former CBO Director Douglas Holtz-Eakin:
I read the CBO and they made the point exactly right: money can only be spent once. The D’s are (again) trying to use dollars twice. The first time (Bennet) amendment said they would not reduce Medicare benefits, but used medicare savings to fund subsidies. Now they are saying they will put the money in the trust fund (and spend it on medicare) but use it to fund subsidies. It is fundamentally dishonest.
Pethokoukis seems to have a lot of problems with the Dems, which naturally makes one question his argument, but I thought it prudent to post nonetheless - mainly because I'm simply not well versed enough in gov't accounting practices to have a better understanding of the issue. I thought someone here might have a more informed take on the issue than myself.