The Dishonesty of Costing Out the Senate Health Care Reform Bill

Last week, a lot was made out of the fact that the Senate health care reform bill, aka the Baucus Bill, would not only be deficit neutral over ten years but, it would actually save the government $89 billion over that same period. However, the dishonesty of this fact is unbelievable.

The calculated savings all comes down to the fact that spending doesn't start until four years past the point when any new taxes and spending cuts have already been implemented. Therefore, a full 4 years of new taxes and spending cuts will be accumulated before any spending begins. Simply speaking, the savings for this $829 billion program have been calculated on the basis of 10 years of deficit benefits (new taxes and spending cuts) and only 6 years of spending. So, nowhere, is there a calculation of a full ten years of spending versus a full ten years of taxes and cuts. The Congressional Budget Office, who did this 6-out-of-10 year cost analysis, says that it can't calculate any costs beyond 10 years because the results might be too unreliable. But, they don't have to. The numbers that we need in order to make an apples-to-apples deficit spending calculation are already there.

First, we know that the program has a total projected spending of $829 billion for the years 2014 through 2020 -- a total of 6 years. That means that the program will actually spend $139.2 billion a year for each of those 6 years of operation. Additionally, we know that the program will reduce the government's deficit by a total of $89 billion at the end of ten years; from 2010 to 2020. That says to me, that the total savings from new taxes and spending cuts can be calculated by adding the $89 billion in net deficit savings to the program cost of $829 billion. Therefore, the per year deficit benefit of this program ($829+$89 divided by 10 years) would be calculated to be only $91.8 billion dollars. As a result, we are looking at a "true" spending of $139.2 billion per year as compared to the net deficit benefit of only $91.8 billion per year; or, a differential of negative $47.4 billion per year.

Now, it doesn't take a genius to see that this program will be spending "more" than it is taking in or saving. As a consequence, we can derive that there would be a 10-year increase in deficit spending that will be closer to a half trillion dollars than the positive $89 billion in savings that the Congressional Budget Office is reporting. There's where the dishonesty lies. No politics; just the facts!