Thursday, March 15, 2012

ACA Updates and the GOP War on Budgeting

If you’ve been watching Fox News or otherwise getting your information from the Republican partisan press over the last 24 hours, you’ve been hearing a lot about new CBO numbers that supposedly shows ACA spending going through the roof. Of course, you’ll not be surprised to hear that in fact, CBO said no such thing, as Jonathan Cohn and Ezra Klein explain. Basically, what happened is that moving a year forward in time for the ten-year projection means that we get one more year in which the law will be fully implemented.

That certainly means that the ten-year price tag goes up, but so do the new revenues and savings in the law – but nothing significant has changed; it’s exactly what the law has been projected to do all along.
In fact, when it comes to fiscal effects, the only change is that the projected surplus generated by ACA has gone up another $50B. Not deficit, but surplus.

Now, if Republicans wanted to complaint that the original 10-year spending estimate was artificially low because of slow implementation, I’d agree with them – as long as they would accept that the bill continues to be fully paid for going forward, and in fact is still projected to generate larger surpluses in the future than it does in next few years. And that the original spending estimates are still, basically, right on track.

But they won’t, because this is the GOP War on Budgeting – when Republicans talk about deficits, they’re usually not talking about federal government revenues compared with federal government outlays. So Charles Krauthammer, on Fox News today:
As we approach the beginning of the program and the no-spending period fades behind us, we get a real appreciation of the ten-year spending which will kick in in two years and extend until the end of time…Think about that. It means on the average every year — again, until the end of time — we are going to add at least a quarter of a trillion dollars in entitlement spending onto a deficit that already was crushing us in the absence of Obamacare.

See that? It’s as if the pay-fors just didn’t exist. Because, for Republicans, more money spent adds to the deficit…as does more money coming in. Because by “deficit” they (usually) just mean stuff they don’t like. So they can bash the taxes and spending cuts in health care reform and also claim that it adds to the “deficit,” as if the two have nothing to do with each other.

Of course, for those who use the normal definition of a federal budget deficit – and that presumably includes anyone concerned with economic effects of fiscal policy – it matters very much whether new spending is paid for or not. And, two years after it was passed, the bottom line is that the budget projections for ACA are holding up just fine. Including those that show it’s going to cut, not increase, the overall government deficit.

14 comments:

  1. I'm still not sure what planet a person would have to live on to think that providing subsidies for 30 million people to purchase health insurance policies will do anything but add astronomically to the deficit/debt, regardless of what some fancy fake math says from the CBO or anyone else.

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    1. Great example of war on budget thinking.

      Just as a general principle, it's of course quite possible for any new government program to both (1) increase federal government spending and (2) to reduce the deficit overall by raising more revenues than it adds in new spending.

      In the particular case of the ACA, there are new taxes, direct spending cuts, and cost savings that all add up to more than offset the new spending. The overall result will be higher spending, and lower deficits.

      (Most of the cost savings are relatively uncertain, but CBO is required to be very cautious about such things, and therefore the cost savings are for the most part not included in the deficit projections. Which means, by the way, that if they really work then ACA will be a huge surplus generator, instead of a marginal one).

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    2. In the particular case of the ACA, there are new taxes, direct spending cuts, and cost savings that all add up to more than offset the new spending. The overall result will be higher spending, and lower deficits. *

      I went ahead and added that asterisk (*) there to say all this is well and good and true *according to decades-long projections by the braintrust of Nancy Pelosi and Charlie Rangel and the like. ALOL. Look I'm a pretty big "team player" type for the Democratic Party, but the ACA is a complete and total mess, and I reject the notion that the government can legitimately require me to spend money to purchase something I don't want on the private market. Tax me all you want and offer a Medicare-For-All solution, fantastic. But what we got outta ACA was the worst of all possibilities amalgamated for maximum catastrophe.

      (in caps) AND I DON'T CARE what any fancy math from the CBO has to say about projections. Human projectioneering has many tendencies which depend on and point it toward massive flaws and failures.

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    3. Non sequitur!

      It sure sounds to me as if what you really care about is the individual mandate, which is neither here nor there when it comes to the budget question.

      As far the budget question is concerned: every last bit of budgeting that the US government does is based on CBO (and OMB) projections. They certainly do have flaws, but that's what we have -- and there's no real long-term reason to believe that they are biased one way or another. A single payer plan would have exactly the same issues about its projections, just as Medicare does now.

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  2. Right, see, I live on this great place called "Earth." You should visit sometime.

    People who do not have health insurance get medical care at the expense of the rest of us. One of my adult, uninsured family members recently got free surgery to remove a cancerous lump, as just one example. That is because hospitals are required by law to treat everyone irrespective of their ability to pay if they want federal assistance.

    Did you get that part?

    Next, not having insurance means people don't go to the doctor for regular check-ups. So diabetes, heart disease and cancer are not caught at the early stages when treatments are cheap. So they cost more when the individual is forced by pain or fear to see a doctor.

    Was that part clear?

    Since hospitals are forced to cover these bills, they make up the shortfall by raising rates for insured customers. Insurance companies, not known for their humanitarian impulses, then raise rates on consumers even further. You already paid for my family member's surgery. They're grateful. Trust me.

    Let's pretend that you still care to read an opinion that dissents from your own. Members of Congress have recently argued that we should "save" money by raising the age Medicare kicks in. Since untreated people don't get better on their own, people who need treatment at 65 will still need it at 67. Only their conditions will have deteriorated that much more.

    Also, it's fifty million people. And going up every day, until ACA kicks in.

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    1. To your point #1:

      "That is because hospitals are required by law to treat everyone irrespective of their ability to pay if they want federal assistance.

      Did you get that part?"

      That should not be the case, or "federal assistance" shouldn't be so vital to these hospitals, or whatever it is that needs to be done so these hospitals can run themselves wisely without losing their asses. It's not rocket science.

      To your point #2:

      "Next, not having insurance means people don't go to the doctor for regular check-ups. So diabetes, heart disease and cancer are not caught at the early stages when treatments are cheap. So they cost more when the individual is forced by pain or fear to see a doctor.

      Was that part clear?"

      Most of the procedural health "care" business is just a thinly veiled racket anyways. This is especially painfully clear when you throw gobs of free Medicare money at it, as anyone with intimate knowledge of its benefits (or access to TV advertisements) can tell.

      Also, it is possible to discuss current events with your neighbor (internet or otherwise) without being condescending and confrontational, just as an aside.

      "Since hospitals are forced to cover these bills, they make up the shortfall by raising rates for insured customers. Insurance companies, not known for their humanitarian impulses, then raise rates on consumers even further."

      Yes, well health insurance is a racket-on-top-of-a-racket, so whaddya gonna do?

      "Let's pretend that you still care to read an opinion that dissents from your own."

      As a matter of fact I find discussing this stuff enormously fascinating and am happy to do it. When people are polite it's a very nice exercise.

      "Members of Congress have recently argued that we should "save" money by raising the age Medicare kicks in. Since untreated people don't get better on their own, people who need treatment at 65 will still need it at 67. Only their conditions will have deteriorated that much more."

      "Need" is the key word there, but this post is already long enough.

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    2. Glad you're engaging.

      Let me tell you a little more about my family member; I'll call him Ted. This is a true story. Ted's a single parent, custodial, makes a living as a consultant, hasn't had insurance since the divorce. He's in his fifties and has some higher education.

      Ted started having headaches. He saw a doctor, and found out he needed an MRI for the diagnosis, which he couldn't afford. So he tried to tough it out. But the headaches got worse. Pretty soon, it was all he could do to take care of his kid. So he lived on child support and burned through his savings.

      When Ted found the lump, he got really scared. He got a reference to a great doctor who treats people without regard to their ability to pay. It was cancer. While they did the work-ups, Ted asked about whether the cancer caused his chronic headaches. The doctor ordered the MRI.

      Turned out that his headaches weren't related, but that they could be treated with a tricyclic. (In addition to antidepressant activity, tricyclics also affect neurovasculature, and can help headaches in some people.) The med is $5 a month at WalMart. Ted is now cancer-free, headache-free, and working again.

      The hospital could have sued him for his house, which is the only thing he has of value. They chose to forgive the debt and cost-share it to the community instead. No doubt the doctor chose that hospital because they were more likely to do that (non-profit).

      So this is what it's like on Planet Earth, instead of Planet Randian. And I talk condescendingly to you because I figure you listen to Rush, and are used to that kind of language.

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    3. That's fantastic for your family member Ted. I'm happy for you and for him.

      My parents both got cancer and died. I saw a lot of health care machinations in that experience, myself. I know things. I'm not a drooling Neanderthal. Just clearing all this up in case it's unclear.

      Now that we're done with storytime, let's try again for an adult discussion:

      The ACA is the just about the worst possibility of all for what could have emerged from "health care reform." Medicare-for-all supported by revenues on today's taxpayers, fantastic. Government dictate requiring purchase of a private market product many Americans don't want, with a brand new subsidies system for a brand new entitlement related to the health "care" industry: oh Jesus God, where's the exit door to this disaster ride.

      I've never voted for anything other than a Democrat and I gave $300 to Obama in 2008 and am enthusiastically voting for him again this year. SO YOUR CONDESCENSION IS MISPLACED AND A$$HOLE-ISH IN CASE THAT SOMEHOW WASN'T CLEAR TO YOU ON YOUR OWN.

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    4. Ok. I apologize for the snark. But your emotions are running very high, and you're not seeing things very well.

      In a perfect world, or in a world like the one where FDR got a filibuster-proof majority in the Senate, Medicare for all might have happened. (Note that in actuality, even FDR couldn't do that.) In a world where people with money have no compunction about purchasing political power, Medicare for all is damned hard to get. Instead, we get new regulation of the insurance industry. And a mandate to purchase insurance.

      The regulations include a cap on how much money the insurance companies can siphon out of the system, and rules that prevent them from continuing with the worst abuses. They won't bring your parents back, but they might help others. The exchanges will also make a difference.

      Your "It's the end of the world as we know it!" shtick doesn't help you, any more than my snark helps me to persuade. We live in this world, and we are where we are. We move on from here. You could start a campaign to get Medicare added to the exchanges as a way to address the constitutional issues, for example. The insurance companies fought that tooth and nail, because it nails their coffin shut.

      So, talk to people and try to make it happen. You have energy - use it.

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  3. To engage with Anon 2:32/5:33 (who I assume are the same person, but cannot be sure..regardless, they are making similar arguments):

    Anon 4:33 made the point, albeit snarkier than I would like. Here it is, laid out in assumptions:

    1) preventative care is cheaper than emergency care
    2) Many "emergency" cases could be successfully treated by earlier preventative care
    3) uninsured people do end up getting medical care, because of the hippocratic oath but also federal/state laws.
    4) the costs of providing that care have to be born by somebody, and they are factored into bottom lines as the cost of doing business, and passed on to those paying the bills (Medicare and insurance companies paying the bulk of it, and those two sources, in turn, getting their monies from taxes and a mixture of employers and individuals)
    5) most of that care is emergency care, not because people don't want to deal with nagging problems, but because they feel they can't afford to deal with the nagging problem. That nagging problem often becomes a serious emergency problem.
    6) Insurance companies would rather people get preventative than emergency care, because it saves them money, so they incentivize preventative care.
    7) Therefore, decreasing the % of the population that is uninsured saves money to the whole system.

    That is the logic behind what is now the liberal position on this. I say "now," because that was ALSO the logic behind the conservative position on this, when conservatives advocated for this type policy for much of the last 40 years.

    Now, 1-6 are assumptions about the world. #1 seems pretty solid, but I suppose it could somehow be wrong in the aggregate, even if right in many circumstances (like, let's say, everyone sought preventative care for every paper cut). But, generally speaking, once it becomes a potential "emergency," you order extra tests and such, because time is a factor. #2 seems logical, but the ratio might be lower than we liberals have been led to believe. #3 seems very sensible to me. Are medical professionals to deny care to anyone who is unconscious and lacks an insurance card? Or lose precious minutes running down their insurance in an emergency? And, the humanitarian perspective: are they supposed to ignore people in pain? #4 is just a fact; unsure how that could be disputed, unless you want to open up our legal system to lawsuits by hospitals against the families of those without insurance. #5 seems the most questionable of these assumptions. What data I've seen supports it, but who knows if I've only been drinking the liberal KoolAid on this one. #6 is somewhat questionable, particularly in an insurance market where it's very possible that the 25-year old you cover physical therapy for today wouldn't have needed you to cover their back surgery when they're 50 because they'd be insured by someone else. Naturally, the bigger your market share, the less likely this is (because, even if their benefits change due to changing jobs or whatever, it's more likely to be back to you). So, I could see scenarios where insurance companies didn't fund preventative care, betting on you not being THEIR problem in the future. #7 logically flows from 1-6. It is correct, but if 1-6 are not true, it wouldn't necessarily follow.

    I think that's a fair treatment of the argument. Where is it flawed?

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  4. Matt, on point #6, substitute "Insurance companies/hospitals/med device manufacturers/any for-profit entity" for "Insurance companies". Then for "preventative" substitute "disease maintaining". Finally, substitute "makes" for "saves". I'm not certain, but I think you'd then see what may be the huge problem with ACA cost projections.

    Imagine a working poor individual with a nascent case of diabetes. He has no insurance, so his disease is not diagnosed until he presents at the emergency room needing, let's say, an amputation. The hospital provides the surgery for free; lacking insurance his situation quickly deteriorates and death soon follows.

    Fast forward to the ACA. Our working poor man now receives (heavily-subsidized) health insurance, so his diabetes is caught much earlier, and he has funds available to keep him alive for several decades, as opposed to the several months he might be limited to in the current arrangement.

    Setting aside the humanitarian argument, clearly favoring the ACA, which will cost less? The free amputation and some other palliative care, today, or five decades of 'free' diabetes management?

    Further, once our working poor person realizes that he is extremely ill with few resources at his disposal, there's a good chance he will be more circumspect with his health decisions, as he has no backup plan. By contrast, with the ACA as a perfect backstop, our newly-diabetic individual may actually be lesslikely to drop the chalupa, knowing that the negative consequences of his bad decisions are covered by the community. (More...)

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  5. I'm just playing Devil's Advocate here, I'm not sure the answer, although I believe that preventive medicine as cost savings is probably overrated. Ours is a medical system that is oriented toward chronic disease maintenance, that's where the profits are, and its a bit hard to believe that a single piece of legislation is going to undo that. Even if you had more checkups/more healthy advocacy/etc, you're not going to have less Taco Bells, so the net overall cost of a tricky long-term disease like diabetes isn't likely to go down with wider health insurance coverage.

    I was reading a while ago about how odd it would seem to someone from 50 years ago, transported to the present, upon finding out the many magnificent advances in society, and how that person would assume that surely there would be a cure for cancer, and how surprised they'd be to find out that, no, actually we don't cure much more cancer, but we're a lot better at keeping you alive. We talk prevention because we like to think of living disease-free lives, but myriad profit motives have led us to a medical system that gives us "living with disease" lives.

    More people living lengthy lives with disease is bound to be prohibitively more expensive, no? I can't recall where I read the cite, but one of the great human tragedies of the uninsured in America is the shocking number of folks who die from chronic ailments for which those of us with insurance more or less live long, normal lives.

    That kind of data surely leads to moral outrage. But it won't be a cheap fix. I don't have the numbers, but suffice it to say, the prevention argument works best when you actually stop the disease in the first place. More commonly, we keep you alive (if you have insurance). Not cheap, and quite possibly about to get a whole lot more expensive.

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  6. Actually, Matt and others, the following controversial frame occurred to me after last night's posts - not saying its right, but its somewhat compelling, and a good reason to think that the cost impact of the ACA might be a massive clusterf*** (even as the CBO wouldn't model same).

    Suppose you were a resident of Halifax, and your doctor diagnosed you with advanced heart disease, recommending a quadruple bypass. Per the policies in place in Nova Scotia, your surgery would be scheduled for perhaps 3 months later, and though no one talks about this, the reason is that the province knows that such a waiting period results in a predictable (for sake of argument, let's say 30%) chance that you will, ahem, "opt out of the system" (i.e. die) prior to imposing your huge, long-term health care cost on the polity. Nova Scotia has a model saying they can only afford to bear the long-term cost of, say, 70% of patients like you, so waiting periods thus get them the outcome the need.

    It is entirely possible that the American system more or less currently achieves the same objective via the massive moat around the privileged 70% who have large group insurance. Those with "good" health care in the US get the massive surgery and longterm expensive care; those without, don't.

    From a social justice standpoint, the Canadian province has the US beat hands-down. From a strictly non-judgmental "cost" standpoint, the two systems may be more or less indistinguishable, with the change from the ACA being the equivalent of a Canadian province removing the (vastly cost saving, if somewhat distasteful) waiting periods.

    Again, I'm not sure this is true, but it strikes me as entirely plausible, and I would find no comfort at all that the CBO didn't model in these effects. As with all financial models, their work is only as good as the inputs; if the inputs they used model "actual disease prevention" when they should have modeled "much more expensive disease maintenance", they very easily could have missed many trillions in new costs from the ACA. Sobering.

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