Daily Archives: October 28, 2010

CBO: Health-care reform bill cuts deficit by $1.3 trillion over 20 years, covers 95%

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I still think the CBO projections are valid even after reading this criticism,

CBO Confirms That Without Accounting Gimmicks, Obamacare Adds to Deficits

The CBO believes that Health-care reform bill will cut the deficit by $1.3 trillion over 20 years and cover  cover 95% of the US population.

The CBO based their projections on current law and bills like to pass at the time which has passed since then…therefore, the original CBO statement stands and the criticism raysmon referenced fails.

The title, “CBO Confirms That Without Accounting Gimmicks, Obamacare Adds to Deficits”, is at best misleading and at worst heavily biased.

The criticism raysmom brought up are based on a bill that has not passed yet and likely will not which increase payments to physicians for Medicare. 

The report was also based on bills that had not passed at the time but passed subsequent to publishing the criticism article.  Details are below…

The criticisms of the CBO report are answered in detail here by the CBO,

http://www.house.gov/budget_republicans/press/2007/pr20100319letter.pdf

In short, the major criticism is based on a proposed bill originally,

H.R. 3961- Medicare Physicians Payment Reform Act of 2009 (the title was not changed even though it has nothing to do with Medicare or Physicians…my guess is that they could not get enough votes or some technical reason why they could not change the title…silly)

 http://www.govtrack.us/congress/bill.xpd?bill=h111-3961. 

However, H.R. 3961 (the one that passed) has nothing about physicians and Medicare only the Patriot Act and intelligence related matters.

The part that has not passed which increases Medicare payments to doctors,

H. Res. 903: Providing for consideration of the bill (H.R. 3962) to provide affordable, quality health care…

http://www.govtrack.us/congress/bill.xpd?bill=hr111-903

is a major argument for the criticism.  The bill will likely not pass as written.

The criticism also stated that the CBO estimate was based on this bill not passed at the time,

Patient Protection and Affordable Care Act (Cadillac tax)

http://thomas.loc.gov/cgi-bin/bdquery/z?d111:HR03590:@@@L&summ2=m&

which passed subsequent to the criticism places a tax in the future on very high end insurance policies for executives and cuts Medicare payments in some cases.

Saving Social Security

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The Republican budget proposal for 2010 correctly states, “Without reform, its Trust Fund will reach exhaustion in 2041; as a result, future retirees face across-the-board benefit cuts of up to 22 percent in that year.”  Their solution is in effect to reduce the primary benefit by 15% overall in increments of .25 percentage points per year over a number of years, in effect a reduction of benefits by 15%…

Reducing the 15-percent Primary Insurance Amount bracket by 0.25 percentage points per year, from the date at which SSA finds it cannot meet scheduled benefits within 5 years.

http://www.gop.gov/solutions/budget page 33 in pdf

On page 34 they further state,

This proposal is relatively modest compared with the magnitude of the Social Security challenge. But it will begin a process aimed at developing bipartisan reforms to ensure Social Security’s sustainability over the long term.

So, they admit this is a “modest” proposal.  What they are not saying is that they think further cuts in benefits will be required to save Social Security.

When Social Security was first devised the retirement age for full benefits was 65.  This was almost exactly the life expectancy for that time.  Life expectancy now is 77.9 years (National Center for Health Statistics).  I think that Social Security could be saved by doing the same kind of thing we do with Social Security Cost of Living adjustments.  If we tied the full benefit retirement age to the life expectancy number for those that have not yet starting paying into the system we would not have to reduce benefits and the original intent of the trust fund could be preserved.

One caveat, Social Security was never designed to be a full retirement package.  In those days private company pension plans were common.  That does not really exist anymore.   However, I think we probably should look at Social Security as a safety net not a ‘be all end all’.  I think we can also significantly help seniors on the Medicare front but I will put that in another post…

So my Social Security goal would, in effect, meet the 22% reduction requirement by 2041.