The always worthwhile Megan McArdle has her own take on the CBO report. In the same spirit as I wondered whether Ezra Klein literally believes, as a matter of fact, that Obamacare will cut health costs and reduce the deficit, McArdle doubts whether Democrats believe (or even care) that they can keep the bill’s fiscal promises.
On the topic of the Cadillac Tax:
The proposed changes increase spending dramatically, most heavily concentrated in the out-years. The gross cost of the bill has risen from $875 billion to $940 billion over ten years–but almost $40 billion of that comes in 2019. The net cost has increased even more dramatically, from $624 billion to $794 billion. That’s because the excise tax has been so badly weakened. This is of dual concern: it’s a financing risk, but it also means that the one provision which had a genuine shot at “bending the cost curve” in the broader health care market has at this point, basically been gutted. Moreover, it’s hard not to believe that the reason it has been moved to 2018 is that no one really thinks it’s ever going to take effect. It’s one thing to have a period of adjustment. But a tax that takes effect in eight years is a tax so unpopular that it has little realistic chance of being allowed to stand.
And, on whether the promised Medicare cuts will ever come:
Ultimately, this rests on the question: are we really going to cut Medicare? If we’re not, this gargantuan new entitlement is going to end up costing us about $200 billion a year next decade, which even in government terms is an awful lot of money. There are offsetting taxes, but they’re either trivial or likely to be unpopular–look forward to a 4% rent increase when your landlord has to stump over the same amount for the new tax on rents. Then look forward to repeal of same.
I think this is a fiscal disaster waiting to happen. But no one on the other side cares, so I’m not sure how much point there is in saying that any more.
Read it all here.