Hold the Hype

The Democratic leadership in the Senate unveiled their health care bill on Wednesday: the Patient Protection and Affordable Care Act.  With a name like that, what's not to like.  Who doesn't want to protect patients?  Who doesn't want affordable care?

In my quest to know more about the bill, I'm steering clear of the radio, TV and blogs.  Tomorrow morning will find my radio fixed firmly on the sports talk stations.  I'm not quite ready to be inundated by punditry from the left and right.  

Still, I want to know what the bill contains.  Until about an hour ago, everything I knew about the bill I had learned from NPR.  It will reduce the deficit by $130 billion.  It is 2000 pages long.  There aren't enough votes yet (60) to bring it up for debate.  I needed more, so I turned to the New York Times for an (unhelpful) overview and have been perusing the analysis from the Congressional Budget Office (CBO).

Here's what gets me after a quick read.  

The headlines and proponents will be touting the fact that the bill saves taxpayers money by reducing the deficit $130 billion over the next ten years.  That makes it sound like the government will be reducing its spending on health care during that time.  Not quite.  According to the CBO, the net effect is $130 billion, but the bill achieves that effect by raising $149 billion from an excise tax on high-premium insurance plans, $223 billion in revenue from other tax provisions and $15 billion in revenue from certain provisions affecting Medicare, Medicaid and other programs.  In other words, the government is going to raise $377 billion in new revenues in order to reduce the deficit by $130 billion.  That revenue isn't free.  Somebody pays for it.

Something else about the deficit saving argument seems fishy to me as well.  While I don't have all the details on when various provisions of the bill will take effect, the bulk of the deficit reduction occurs before the creation of insurance exchanges in 2014.  In fact, the net effect of the bill over the last four years will be to increase the federal budget deficit by $18 billion.  That assumes the government can realize $42 billion in off-budget savings from Social Security, the postal service and other programs.

The CBO analysis does not include all of the costs that will result if the bill passes.  For example, the analysis suggests it will cost the IRS and Health and Human Services another $10-$20 billion to implement the changes in the bill, but those costs are not part of the overall analysis.

It sounds to me like the bill's proponents can only claim the reduction in the deficit by raising taxes early, delaying the benefits and ignoring some of the costs.

The budget deficit is only one part of the equation.  What about the direct costs for taxpayers and other organizations?  Will this bill actually reduce the amount of money we spend as a society on health care?  What about my overall healthcare bill?  Will it decrease?  Will I receive better care?

The CBO doesn't say.  "At this point the agency has not assessed the net effect of the current legislation on [national health expenditures], either within the 10-year budget window or for the subsequent decade."  The closest the CBO comes to assessing the impact outside the federal government is to say that unfunded mandates will "greatly exceed" $1.39 billion for the private sector and $690 million for state, local and tribal governments.  That's not saying much.  I could have guessed as much.

The only real societal benefit the CBO can point to is that the percentage of "legal nonelderly residents" with insurance coverage will increase from 83% to 94%.  That's an improvement, but is the legislation a good way to go about achieving those results?

Overall, I'm not encouraged by the bill.  There are other provisions I don't like and I have some issues with the basic approach in some ares, but I'll save those topics for another time.  It isn't that I'm opposed to legislation to reform our health care system.  I believe we should treat health as a public good in much the same way we think of national defense or our transportation infrastructure.  Without the information to understand the real costs of the legislation, though, how can I judge whether it is worth the benefit?  I don't support our representatives passing another bill just for the sake of doing something.  

We should hold the hype until we have a few more facts.