The answer is that in the first four years (2010-2013), new revenues are $59 billion; new spending on insurance is $29 billion; and other spending (e.g. Medicare) decreases by $29 billion, for a net deficit reduction of $59 billion. And in 2014-2019, new revenues are $361 billion; new spending on insurance is $759 billion; and other spending decreases by $482 billion, for a net deficit reduction over those six years of $84 billion.
See for yourself — this is from the CBO report linked above (click for larger image):
Now, as the above shows, it’s not just about new taxes. A key deficit-reduction provision is the Medicare piece. The Senate bill would (quoting the NYT tool linked above)
[s]queeze roughly $500 billion out of the projected growth in Medicare over 10 years, including $116 billion in cuts to federal subsidies for privately offered Medicare Advantage plans.
The reconciliation bill adds another $16 billion of savings from Medicare Advantage. And I’ve heard it said that the cuts in Medicare reimbursement rates will never happen, which will throw everything off. I don’t know whether that’s true, but it has nothing to do with the 10/6 argument; that’s a separate issue. The 10/6 issue, as far as I can tell, is a nice, but essentially fake, sound-bite.
The other point is, if the folks arguing 10/6 were correct, then you would expect the next 10 years to add to the deficit. the exact opposite is true. the next 10 years saves over $1 trillion
that’s also in the CBO report linked in the main post.
Written on the side of a beat-up minivan on 139 in Marshfield. Happy that I now understand their argument, and more importantly, why it’s not valid.
think you’re placing a little too much faith on the CBO report. Remember, the CBO was pulling all nighters last week with constantly changing scenarios – I wouldn’t bank on these forecasts – and you do realize that the 3.8% unearned income tax was a “plug” number to fit the spreadsheet, not some well thought out and reasoned revenue stream.
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p>Will recall a meeting back in ’94 when Roland King (chief actuary at the time of HCFA and a Carter appointee, so apolitical when discussing the Clinton proposal) spoke about his experiences in the frenzied days when Hillary and Ira were busy cobbling up late night numbers. They came to him for his position on cost impacts from proposed changes in their bill; they had a monstrous cost savings associated with their idea. His position was that the real savings had already taken place and were going to happen regardless of their bill, so his official grading of cost savings was $0 for their idea. Can’t double count stuff that is going to happen anyway.
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p>If you do read the CBO report or more indepth analysis, do again realize that their forecasts (which they caveated the crap out of – not the confident guarantee of $1 trillion portrayed) are predicated on the proposed cuts actually occurring. Once things have settled down, start calling mom down in FL/AZ et al and ask them about gutting Medicare Advantage. Not going to be a popular move among seniors.
what I’m trying to point out is that a lot of people are not telling the truth about what is actually in the CBO report. Whether the CBO report is accurate is beyond my competence; but it’s all we’ve got.
is that the CBO report isn’t gospel. “All we’ve got” doesn’t mean that we only rely on CBO as the one and only prognosticator of future costs.
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p>There are actuarial reports out there from Richard Foster (and will be coming when the final details are set out) and past history about proposed politically unpopular spending cuts not being implemented or behavioral patterns not being recognized in CBO analysis (do you know exactly how popular tax-free municipal bonds are going to be in 2013 going forward in response to the 3.8% Medicare extension on unearned income?).
and I trust you take mine — that the 10/6 argument, which purports to be based on the CBO report, is crap.
that the Senate version has several items slated for 2011 that were delayed by the reconciliation bill, which is not yet law, not sure I’d say it is “crap” to say that 10/6 is without merit. If anything, looking at the papers this morning and seeing Gov. Patrick assessing the damage that the excise tax on medical devices to the MA economy, I’d might be more inclined to use your word to describe the projected future revenue streams.
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p>Just wait until the Medicare Advantage folks start protesting (shades of Rosty back in ’89). Or for that matter, when those middle class folks who currently have high medical bills start analyzing the impact of the 7.5% to 10% increase in medical deduction thresholds or the cap of $2,500 on Flexible Spending Accounts. Some strange stuff in the name of Health Reform snuck in there that doesn’t exactly help those who are sick right now.
The report I linked above incorporates the reconciliation bill. The numbers I quoted assume that the reconciliation bill becomes law without substantive changes.
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p>I stand by my view that 10/6 is crap. Of course, all of the issues you mention may well be altered as a result of the political process — a possibility of which CBO is acutely aware and mentions repeatedly. But you are mixing up two distinct arguments. Why?
by stating “10/6” is crap you are trying to shoot down more subtle concerns with the viability of this whole scheme. If “10/6” is simplification, I’d also say that “$1 trillion in deficit reduction” is on the same level. After looking at how the CBO report was released last Friday and used as the totem to get the bill passed, concerned that simplification plays on both sides of the aisle here.
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p>I’m an actuary, so used to having “eyes glaze over” reaction when trying to convey minutia in bills. However, as an actuary I’ll lean more on the validity of 10/6 being closer to reality than any deficit reduction by proponents of the current health bill.
you are obfuscating, and I don’t care whether or not you are an actuary. I am not trying to shoot down anything more “subtle” than the basic 10/6 argument, which is that the CBO estimate is misleading because it includes 10 years of revenues and only 6 years of benefits. That, as I have I believe incontrovertibly demonstrated in my post, is simply false.
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p>If you want to call into question the CBO estimates themselves, that’s fine — but that is a different argument. I am responding to the argument advanced by Charlie Baker, David Brooks, and other “moderate” Republicans who purport just to be concerned about the fiscal implications, but in reality are advancing an argument that (I suspect) they know to be flawed, simply because it’s easy to explain, so it gives them an easy way to complain about the health care bill.
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p>Finally, as to the supposed $1 trillion savings over 2020-2029, did I even mention that in my post? No. I’m talking about 2010-2019. So why are you talking about in response to what I wrote? Respond if you want to john16 upthread about that; don’t bring it into the 10/6 discussion. It’s not germane.
… Ezra:
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