Talking About the Revised Baucus Health Bill

I did an interview on Fox Business on Thursday to discuss CBO’s analysis of the revised Baucus health bill.

Going in, I had three basic points that I wanted to make:

  • First, as I discussed yesterday, CBO’s estimates indicate that the bill would cost a bit more than $900 billion over the next ten years, not the $829 billion that most commentators are using. The latter figure reflects the costs of expanding coverage, but does not include other efforts — e.g., paying more to physicians under Medicare and expanding the Medicare drug benefit — that are also included in the bill. The $75 billion difference strikes me as important in itself, but the larger issue may well be how much additional spending is in the House bill. The previous version of the House bill was often described as costing about $1 trillion over ten years, but if you include all the new spending in it, the actual figure was north of $1.5 trillion.
  • Second, as I noted in my discussion of the original Baucus proposal, the bill satisfies all the key budget tests, at least as it is written. The tax increases and spending reductions in the bill more than offset the costs of expanded coverage (and the other spending increases) over the next ten years and the subsequent decade. In short, the bill makes a serious effort to take budget concerns into account. On this score, it is much better than what we’ve seen from the House.
  • Third, there are serious questions, however, about whether the spending reductions and tax increases scheduled in the bill will actually come to pass. As we’ve seen with the doctors in Medicare, on the one hand, and the alternative minimum tax, on the other, policymakers often have a hard time allowing scheduled spending reductions or tax increases to occur. Thus, the actual budget implications of the bill may be worse than what CBO’s analysis suggests.

I haven’t watched the video, but my recollection is that I made points 1 and 3, but didn’t manage to work point 2 in.

On the lighter side, you will also see that (a) I still haven’t mastered my collar and (b) judging by my wife’s laughs, there’s an amusing moment at the end where you can tell that they are whispering in my ear: “You are still on camera.”

About Donald Marron 294 Articles

Donald Marron is an economist in the Washington, DC area. He currently speaks, writes, and consults about economic, budget, and financial issues.

From 2002 to early 2009, he served in various senior positions in the White House and Congress including: * Member of the President’s Council of Economic Advisers (CEA) * Acting Director of the Congressional Budget Office (CBO) * Executive Director of Congress’s Joint Economic Committee (JEC)

Before his government service, Donald had a varied career as a professor, consultant, and entrepreneur. In the mid-1990s, he taught economics and finance at the University of Chicago Graduate School of Business. He then spent about a year-and-a-half managing large antitrust cases (e.g., Pepsi vs. Coke) at Charles River Associates in Washington, DC. After that, he took the plunge into the world of new ventures, serving as Chief Financial Officer of a health care software start-up in Austin, TX. After that fascinating experience, he started his career in public service.

Donald received his Ph.D. in Economics from the Massachusetts Institute of Technology and his B.A. in Mathematics a couple miles down the road at Harvard.

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