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If Congress wants to get their Obamacare bill passed they would do well to lose the phone number of the Congressional Budget Office, for the second time in two weeks the CBO has dealt a serious blow to the Democratic party sales pitch for the President’s signature health care plan.

Testifying before Congress in mid-July CBO director Douglas Elmendorf said bills crafted by House leaders and the Senate health committee do not propose “the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount.” Though President Obama and Democratic leaders had constantly said that controlling the skyrocketing growth in spending on government health programs such as Medicaid and Medicare is their top priority, the reform measures put forth so far would not fulfill their pledge to “bend the cost curve” downward, Elmendorf said. Instead, he said, “The curve is being raised.”

Last week the house agreed to a White House-backed proposal to create an outside panel with the power to make cuts to government-financed health care programs. This panel was going to come up with all those savings to help pay for Obamacare. Today, the CBO head shot down another Obamacare myth. That proposal to give an independent panel the power to keep Medicare spending in check would only save about $2 billion over 10 years which wont do much to offset Obamacare’s $1-1.6 trillion price tag. In a letter to Congressman Steny Hoyer, Elmendorf said in part:

The estimated savings of $2 billion over the 2016–2019 period reflect CBO’s  assessment of the likely scope of the proposals that the council would make and the probability that its recommendations would be implemented by the President. (The possibility that the Congress might enact future legislation to disapprove those recommendations is not relevant to CBO’s estimate of the savings that would arise from enacting the IMAC proposal into law; instead, the impact of legislation disapproving the recommendations would be reflected in CBO’s cost estimate for that subsequent legislation. See the section “Budgetary Treatment” below.) Under H.R. 3200, as introduced, payment rates for nearly all Medicare services would grow more slowly than anticipated inflation. Thus, CBO considers it unlikely that IMAC would recommend substantial additional savings (relative to savings already expected under H.R. 3200) through further reductions in Medicare payment rates. In addition, several specific features of the legislation in its current form would reduce the likelihood that the council would recommend reductions in payment rates or reforms in the delivery system for Medicare services that would yield much greater budgetary savings: 

  • The proposed legislation states that IMAC’s recommendations cannotthe council to reduce such expenditures nor does it establish any target for such reductions.
    generate increased Medicare expenditures, but it does not explicitly direct
  • As proposed, the composition of the council could be weighted toward medical providers who might not be inclined to recommend cuts in payments to providers or significant changes to the delivery system. 
  • Some types of fundamental program changes would probably require study and experimentation before they could be implemented, and it is not clear what resources the council would have to develop recommendations involving such changes. Under the proposal, IMAC might have limited access to the resources of CMS and its Office of the Actuary for directing the study of reform ideas that could offer some promise of significant budgetary savings.
  • Significant changes in the way payments to providers are made and in the incentives facing beneficiaries would probably be necessary to obtain substantial savings. Outside influence on the council and the President, however, might make it politically difficult to recommend and implement reforms that could be viewed as undesirable by interested parties. Medical providers, beneficiaries, and Members of Congress would probably exert considerable pressure on both IMAC and the President to balance recommendations for savings against beneficiaries’ concerns about the costs and availability of medical services and the interests of those receiving Medicare payments for delivering services.
  • Finally, the first year of potential savings under the proposal is 2016. The five-year start-up period (and one-year lag in implementation) called for by the draft legislation would give the council some time to study reform proposals. However, concrete new evidence upon which to base some kinds of large-scale reforms might not be available for some time hereafter.

Is it me, or does it seem that just about everything the President and team tells us about this bill is false?

Either way, this is another blow to Obamacare as the “Blue Dog” democrats who already feel the plan is too expensive will see this latest  CBO as a further vindication of their opposition.

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