The greatest of all the many painful ironies in the health-care debate of the past year may be that the Democrats’ closing “argument” is to claim the mantle of fiscal responsibility. Their leaders are doing their best to twist yesterday’s CBO score of their reconciliation bill to suggest that their plan will not only solve America’s health-care financing problem but reduce the deficit too.
It will do neither, and will make both problems worse. The CBO has plainly said that the Senate bill would not reduce but would rather increase health-care spending over time. Spending on the new entitlement it would create would grow faster than both Medicare and private health-care spending have grown over the past decade. Premiums in the individual market would grow far far more expensive, and many middle-class families would face immense cost increases. And the plan would increase demand while driving suppliers out of business (the Obama administration’s own CMS actuary says about 20 percent of doctors who rely on Medicare “could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program”), thereby raising prices. Health-care financing would become a bigger problem, not a smaller problem.
And the deficit would too. All of the spending laid out by CBO yesterday (more than $2.4 trillion in the first decade of the program’s full operation) will certainly happen if the bill is enacted, but many of the offsets are very unlikely to happen. The bill would leave it to another president and Congress, in 2018, to impose a tax on ”Cadillac” health-care plans — a tax whose definition of “Cadillac” would grow much more slowly than the cost of coverage, so that more and more people would be covered by it every year. Why should we expect a future Congress and president to make such a politically painful move if the present Congress and president won’t do it? It would also leave it to the next Congress to drastically cut physician pay in Medicare — even as today’s Congress refuses to make much more modest cuts, and so wants to pass a “doc fix” that will cost more than $300 billion. Simply everybody knows this cut won’t happen, and as the CBO (with its customary bureaucratic understatement) has put it: “the long-term budgetary impact could be quite different if key provisions of the bill were ultimately changed or not fully implemented.” This is not fiscal responsibility; it’s not even naïveté or self-delusion. It’s just plain dishonesty.
But worst of all, this bill not only shirks the obligation to be fiscally responsible today, it would also make it much more difficult for future policymakers to do something about our ballooning entitlements and deficits in the future — even if they did somehow find the courage to want to do so. The bill takes most of the tools those future policymakers might use to reform the structure of Medicare (which is by far our biggest fiscal problem) and uses them instead to construct a new entitlement that will grow more and more expensive even more quickly than Medicare will. In other words, even if the bill were actually deficit neutral, deficit neutral just means it would keep us on the same budget trajectory we are on now — with trillion dollar deficits in each of the next 10 years and a national debt of more than $20 trillion by 2020 — but leave us with much less money and far fewer options for doing anything about it. And of course, it won’t be deficit neutral — far from it.
We are in the fiscal mess we’re in because again and again our leaders (Republicans and Democrats alike) have failed to find the political courage to fix our entitlement system. That won’t change with this bill. What will change is that the problem will be made much worse, and the means available to fix it in the future will be made fewer and more difficult and costly to employ. No one who votes to do this to our country should be allowed to call himself a fiscal hawk.