Explainer, Please
The Congressional Budget Office says that if it passes health care reform will save $81 billion over 10 years. Can someone write an easy to understand blog post explaining to an ignorant non-wonk like me how you cover millions more people, avoid government rationing, and save all that money? I’m asking in earnest. I haven’t followed this bill very closely, and this result seems utterly counter-intuitive to me. What is it that I’m missing?
Conor, it’s exactly this attitude— I haven’t read something, I admit I’m inexpert, but it just seems off to me, and golly, that’s worth mentioning— that makes the blogosphere so fatuous.
— Freddie · Oct 7, 11:16 PM · #
Freddie, you misunderstand the subject of the post. It’s not about the CBO or health care reform. It’s about Conor’s intuitions. What’s their wellspring? How does intuition pervade our perceptions? It’s a reflective topic.
— sidereal · Oct 7, 11:18 PM · #
Conor,
First of all, I’d recommend reading Keith Hennessey for all your wonkish needs.
Here’s a partial answer: the CBO only scores within a 10 year window. All of the bills working their way through congressional committees are explicitly designed so as to take advantage of that. Most of the expensive parts will not begin taking effect until late in the 2010’s, and much of the cost occurs after 2019. Hence, it doesn’t make it into the CBO score.
That’s not even mentioning the fact that the bill doesn’t really do anything until 2013, but that’s purely to improve Obama’s re-election chances in the case where people don’t like the bill’s results, and has nothing to do with CBO scoring.
— Will Wilson · Oct 7, 11:32 PM · #
Not an expert, but I remember this from the Oregon Plan debates.
Back in the 90s Oregon wanted to take its federal money and make some adjustments to who got covered for what. When I say “Oregon” I mean there was a long series of townhall meeting all across the state to explain to people “We have this much money. This is what different stuff costs. How do you think we should spend it?”
There was a big battle between Oregon and the Fed over this because it meant there would no longer be unlimited coverage for the poorest, but there would be more coverage across the board. Lots of resistance from congressmen who represented overwhelmningly impoverished districts (Cue Sailer.)
Anyway, one of the things that Oregonians decided is that there would be no public money for premie babies with birthweights under 2.5 pounds. The consensus/calculus is that the outcomes in these cases is poor and that the money spent on one very small premmie baby with poor survival odds could be spend on prenatal care for lots of women who weren’t getting it under the current plan and prevent many problems and save the associated costs, which could go into other areas with more bang for the buck.
I guess that sounds like the State of Oregon was a death panel, deciding who lives and who dies; in this case really really small helpless babies.
But I supposed you could also spin it as a life panel. That’s the way I saw it. That’s the way I voted. Don’t know how it turned out. I live in New York now.
Freddie, are you serious? I’m starting to think you’re the Ross Douchat of the left.
— Tony Comstock · Oct 7, 11:46 PM · #
Through cuts in Medicare and a whole host of taxes, they claim this will reduce the deficit.
— mike farmer · Oct 8, 12:00 AM · #
Yes, but sidereal, he can just read the thing!
— Freddie · Oct 8, 12:02 AM · #
Agree with Freddie. I’m most of the way through it now. Just read it. Then read Ezra Klein, Matt Yglesias, Keith Hennessy, Tyler Cowen, Jonathan Cohn, and whoever all those chaps tell you to read. And I should have something more detailed posted tomorrow.
The savings are found through spending cuts and tax hikes. The problem, as I see it, is there is no fundamental cost-control built into the plan. It’s all far too timid in that regard. I am really hoping they tag on Wyden’s Free Choice proposal to the final Senate bill. We shall see.
— E.D. Kain · Oct 8, 12:11 AM · #
Here’s a Health Care Free Lunch
That’s about as non-wonky as I get.
— Nicholas Beaudrot · Oct 8, 12:22 AM · #
Just because someone isn’t currently covered, doesn’t mean we’re not paying for their healthcare. In fact, their healthcare costs more than if they were covered, because they can’t get preventative care, delay treatment until more costly interventions are required, and can’t negotiate as a group with providers.
That’s how you cover more people at the same time you save money – their care gets a lot cheaper when they start out already on your books, taken as a group, instead of passing their bills along to the government as individuals, as a last resort.
— Chet · Oct 8, 12:26 AM · #
Excerpt from the CBO director blog:
“substantially reduce the growth of Medicare’s payment rates for most services (relative to the growth rates projected under current law); impose an excise tax on insurance plans with relatively high premiums;”
— Mercer · Oct 8, 01:18 AM · #
“substantially reduce the growth of Medicare’s payment rates for most services (relative to the growth rates projected under current law); impose an excise tax on insurance plans with relatively high premiums;”
And if you think that will ever actually happen, there’s a nice bridge in Brooklyn that I’d love to sell you. ;~)
— Will Wilson · Oct 8, 02:01 AM · #
Thanks, a helpful comment section, Freddie excluded — I mean, look at my post, Freddie, and then look at how you rephrased it. Do they seem like the same to you?
Questions:
— Is anyone putting out projections beyond 10 years?
— If it happens, contra Will Wilson, that the scheduled decreases in Medicare payment rates do happen, how are doctors and hospitals going to react?
— Conor Friedersdorf · Oct 8, 05:11 AM · #
Payment rates are going to increase, not decrease.
— Chet · Oct 8, 05:36 AM · #
Superficially, supply will meet demand at a different place, and people will stand in lines more often. Now, that’s an incredibly simplistic view, and the reality will have a lot to do with the specific wrinkles of the healthcare industry. I don’t think anyone really knows.
As for the after-2019 stuff, my friend Nathan Willard has pointed out to me that the CBO did something unusual and tried to project beyond that date:
http://cboblog.cbo.gov/?p=387
Megan McArdle and Wesley Smith have interesting perspectives on why those numbers are somewhat suspect. I’d also highly recommend the New Atlantis’ healthcare blog on the subject:
http://www.thenewatlantis.com/blog/diagnosis/cbo-and-a-firewall-that-will-never-hold
— Will Wilson · Oct 8, 05:46 AM · #
Conor: I seem to understand there’s going to be plenty of Medicare cuts (sorry, cost savings). But I’m with you, haven’t followed it that closely, would like an explainer.
— PEG · Oct 8, 07:53 AM · #
My understanding is that the savings are from a combination of:
1) Promised medicare cuts in the future, particularly medicare advantage but also vanilla medicare;
2) A variety of new taxes and fees; and
3) That the savings are over a ten year period, where the spending cuts and taxes are promised to ramp up faster than the benefits. (In other words, if I propose increase taxes $100 billion per year for ten years, and promise to pay $150 billion per year in benefits for the last five of those years, then I my proposal results a substantial amount of budget savings over the 10 year period, even if it’s a net deficit for every year after that.
— J Mann · Oct 8, 01:09 PM · #
Freddie, that’s a classic Freddie post – in essence, the substance of the debate is irrelevant because you don’t like Conor’s attitude.
IMHO, Conor’s attitude is just about right – if you recognize that you are not expert about something, but it also strikes you as wrong, then learning more about that thing might be helpful.
You might learn something new which helps you to realize that your original intuition was wrong. (This is often the case when people first learn about orbital mechanics, or why rent control doesn’t work, for example.) Or you might learn that your intuition was right.
Still, mocking the attitude of inquiry itself is a lousy attitude in its own right.
— J Mann · Oct 8, 01:27 PM · #
Conor, you could or could not have read this document before posting on it at all?
Freddie, that’s a classic Freddie post – in essence, the substance of the debate is irrelevant because you don’t like Conor’s attitude.
No. I want him to read a short and publicly available document before he comments about how it seems to him.
Still, mocking the attitude of inquiry itself is a lousy attitude in its own right.
The attitude of inquiry would compel someone to read the thing he is curious about.
— Freddie · Oct 8, 01:33 PM · #
Freddie, you do understand that I have never voted for a Republican candidate in my life, that that’s more than 20 years of voting, and I find the way you engage in political debate mostly unreadable. Are you really sure you want to be alienating people like me?
— Tony Comstock · Oct 8, 01:44 PM · #
And please don’t misunderstand, when you’re not going on about politics you seem like an interesting, thoughtful, even likable fellow.
— Tony Comstock · Oct 8, 01:47 PM · #
We’re not talking about politics, though, Tony. We’re talking about certain preconditions for talking about politics.
I’m saying that if Conor was asking about a 400 page book, I would understand. But he’s talking about a 27 page document, several pages of which are charts. And I feel like he should have just read it. I could be on the wrong track with that; I’ve been wrong before. But I don’t think it’s all that unreasonable for me to express that opinion. Then you have J Mann, who I believe is criticizing me in this instance in part because of his perception of my political leanings. When he says that to me “the substance of the debate is irrelevant,” it rubs me the wrong way, because the substance of the debate is the CBO report. I’m the one asking that the substance of the debate be considered.
— Freddie · Oct 8, 01:54 PM · #
Believe me Freddie, I know what’s it’s like to think (to know, actually) that everyone in the world is wrong. It’s a tough row to hoe. I recommend a sea-going vessel as back-up planl and failing that, a hollow tooth. But with or without, good luck. Carry on.
— Tony Comstock · Oct 8, 02:03 PM · #
it’s interesting that a number of people are citing the idea that the CBO only looked at a 10 eyar projection and that the real costs come after that window. the reality is that the CBO did not constrain itself to 10 years, and that the projection actually shows savings increasing after the 10 year mark.
this is why i think Freddie has a point. clearly some of the people offering “explanations” haven’t bothered reading the document, either. what good is seeking information from a group which is at least partially uninformed when the information itself is both readily accesible and fairly approachable?
— cb · Oct 8, 02:12 PM · #
1) Freddie, if the CBO report is so easy to read and understand, why don’t you summarize it for Conor? For example, was my summary right, as far as it goes?
2) I don’t blame Conor for wanting a simplified version of the CBO report. Granted, the CBO report isn’t that long, but it’s a long way from the whole picture.
For example, the National Review says that one of the key assumptions in the bill is that doctor reimbursement rates will be cut 25% in 2011 and held to below the rate of general inflation thereafter. Is that true? I’m sceptical, because NRO’s postings should always be taken with a grain of salt, but I can’t tell one way or the other from the CBO report. The report does reference “Permanent reductions in the annual updates to Medicare’s payment rates for most services in the fee-for-service sector (other than physicians’ services), yielding budgetary savings of $162 billion over 10 years,” but it doesn’t explain what those reductions would amount to.
— J Mann · Oct 8, 02:38 PM · #
Jonathan Adler also raises some good points here:
http://volokh.com/2009/10/08/scoring-a-bill-that-does-not-exist/
— Isabel Archer · Oct 8, 02:40 PM · #
CB, Conor asked for an explanation of the 10 year projection, so that is what I explained. You are correct that the CBO also offered a rough estimate of increasing savings beyond 10 years, assuming the bill was enacted as proposed and not thereafter amended.
In part, this is because the tax revenue from the “Cadillac healthplan tax” increase as the rate of medical inflation outstrips the tax ceiling, bringing more and more private plans under taxation, and because the savings from the hypothetical permanent reduction in the rate of increase of payments to doctors and other providers continue to accrue over time relative to the increase in the tax base.
— J Mann · Oct 8, 02:42 PM · #
First, I have not read the CBO report either. So, if you think that is a critical factor, include that in any determination of my credibility. Having said that, Freddie’s post to Conor’s point seemed pretty antagonistic and abusive in response to a post that reflects what I expect would be the attitude of vast majority of reasonable, responsible people. Namely, that a CBO report is not where we would go to find an “easy to understand explanation” for non-wonks. It may be “only” 27 pages. I did not know that it was so short because I have succeeded to go through life as a happy and generally well-informed person without reading CBO reports.
The general public is not the intended reader of CBO reports. Conor does not hold himself out as a policy expert. Primary texts are great for experts on a given topic or in a given field; for the rest of the world, secondary sources are critical. This isn’t grad school. And Freddie knows this. I do not understand why he is so abusive toward Conor when Conor has been nothing but respectful toward him.
— Jay Daniel · Oct 8, 02:49 PM · #
Freddie, looking back over your old posts, let me try to be a little less combative.
If you had written “Conor, the report answers these questions very clearly. The best way to answer your questions is to read it, and it would be a profitable use of your time”, I wouldn’t have blinked. If you had added a thumbnail summary of the most important things you learned from reading the report, I would have thought your post was affirmatively good. Instead, you just went after Conor, and you still haven’t addressed the substance of the questions. I, by contrast, as awesome as I am, addressed the substance first and then went after you in a separate post. ;-) “I don’t know anything, explain it to me” is a perfectly good way to start a constructive discussion. Socrates, for example, was fond of it. (See also Columbo). Saying “What a fatuous question” will never get you to the meaning of justice, or figure out who killed old Mr. Biddle.— J Mann · Oct 8, 02:51 PM · #
There seems to be a very curious failure of the English language occurring here.
What this phrase describes is not a cut in rates, it is an increase in rates.
— Chet · Oct 8, 03:36 PM · #
The pertinent question, regardless of what the report contains, is how, knowing what we know about government projections and history of “cutting” any safety net program, can we possibly expect to save S81 billion dollars over 10 years by passing this healthcare reform bill?
Reason, and experience watching government in action, trumps projections.
Unless something miraculous thwarts healthcare reform in its present offering, we will be set up for a frenzy of spending and debt like no one can imagine.
Did anyone see that line of 50,000 in Detroit for 5000 rent-assistance applications? This is just the start of the feeding frenzy at the public trough — there are now expectations of government help which have succeeded our production and wealth creation, and the demands will become stronger and stronger — passing this healthcare reform bill is just the beginning — tinkerers are getting out their tinker-tools as I write.
— mike farmer · Oct 8, 04:27 PM · #
This, I think, is the ultimate heart of conservativism; the ultimate indication that there is something profoundly wrong with conservatives that should disqualify them from governance or any other service where clear apprehension of reality is required.
Reasonable people see a two-day line for the free clinic or for affordable housing as an indication of a crisis; as a massive, unmet need for the health care and housing people need to live. A conservative sees the lines themselves as a problem; as fundamentally no different than Apple fanatics camped out for the latest iPhone.
As pigs at a trough, basically. (Indeed, mike farmer even calls it a “trough”.) Frankly this failure of reason, failure of perception, and ultimately failure of humanity itself should be enough to disqualify someone from any position of responsibility. Sadly, we’ve instead chosen to enshrine this sort of blinkered, selfish abnormality as a legitimate political party.
— Chet · Oct 8, 04:50 PM · #
What do you mean by “avoid government rationining?” If by avoiding rationing you mean unlimited healthcare for everyone, of course that’s not going to happen.
But if there’s a hole in the boat and you just keep bailing, and your rate of removing water is less than the rate of water coming in through the hole, in the long run you’re much better off fixing the hole (or at least making it smaller) rather than keeping up the same thing while the water pours in and the boat slowly sinks. So it sounds like they are trying to identify the “leaky” areas of medicare that are causing the astronomical growth in health care costs, and targeting them for – not reductions in spending – but reductions in spending growth. And there really doesn’t seem to be any correlation between medicare spending versus outcomes, so it seems practical that they could encourage whatever practices are used by those areas that have the best outcomes and lower spending (like the Mayo clinic) to reduce spending without hurting care.
— Sunny · Oct 8, 07:31 PM · #
“This, I think, is the ultimate heart of conservativism; the ultimate indication that there is something profoundly wrong with conservatives that should disqualify them from governance or any other service where clear apprehension of reality is required.”
Chet, first of all, I’m not a conservative, and secondly it’s not your fault you haven’t read my blog, but there I describe why progressive programs aren’t doing anything to help the poor, and as I’m stating here the demand for assistance is greater than the government’s ability to give assistance — progressive policies are killing the market which could be prosperous and therefore charitable. Rather than talk about government policies, I work daily with homeless men, helping them find jobs and shelter, helping them to become self-sufficent. What I’m talking here is the practical reality of the welfare state.
— mike farmer · Oct 8, 11:16 PM · #
Total private charitable giving in the US, annual: $300 billion*.
Total US Federal budget, annual: $2,979 billion.
This is what I mean about conservatives not being qualified for clear apprehension of reality. Oh, right, you’re “not a conservative.” (I wouldn’t admit to being one these days, either.)
*This is the first number I could find with a google search, it’s from 2007, a year which set a record for charitable giving that has yet to be matched.
— Chet · Oct 9, 12:13 AM · #
Chet, believe what you want to believe — I’m more of a libertarian/classical liberal — my belief is that the welfare state has minimized charity — without state involvment charity organizations would have thrived and would be much more efficient and effective. The welfare state has ruined lives, families and communities.
— mike farmer · Oct 9, 03:09 AM · #
1,000% more effective? “Believe what you want to believe”, I guess. Your position is untrue to reality and untrue to human nature.
The idea that we can solve the health care crisis – or any crisis for that matter – by private charitable giving is patently absurd.
— Chet · Oct 9, 03:59 AM · #
“The idea that we can solve the health care crisis – or any crisis for that matter – by private charitable giving is patently absurd.”
All I’m saying is that private charity organizations, if they’d been left to naturally develope, would have dealt with poverty much more efficiently and effectively — but, even now with the crumbling of the state systems, we might be forced to go back to private organizations before too long. If government is not radically transformed and limited, it will implode at some point, and the private sector will have to pick up the pieces. We should at least be going in the direction of private solutions, so that we can head off collapse. I’ve dealt with the system and its reults enough to realize it can’t be sustained.
— mike farmer · Oct 9, 11:13 AM · #