The CBO is back in vogue again among the conservative set thanks to a misinterpreted report from the august congressional bean counters, which has gotten a little pickup in the news this week. The CBO estimated the cost to implement health-care reforms in the Patient Protection and Affordable Care Act, finding that getting the reforms organized might require some $115 billion in discretionary spending. Reform opponents, predictably, flipped out, claiming the bill will cost over $1 trillion and calling for repeal. But they ought to look a little closer at the numbers: For one, the bill is still estimated to reduce the deficit by $143 billion over 10 years. When Republicans like Majority Leader John Boehner talk about the "cost" of the bill, they continually elide the "savings" in the bill, as well as the revenue-increasing measures that create the net deficit decrease. It amazes me that that reporters continue to let them get away with that.
In any case, the costs of implementing this bill will go through annual congressional budget procedures, which include Obama's so-called "freeze." Perhaps more important, this will also include pay-go rules that require any new costs to be offset, which means that implementing the new law still won't blow up the budget. This discussion centers on the difference between mandatory costs of the bill, like Medicare and Medicaid changes, and the discretionary costs of implementation. Here's Jim Horney, a budget expert at the Center on Budget and Policy Priorities:
First is the cost to the Department of Health and Human Services, the Internal Revenue Service, and other federal agencies of administering the new arrangements to expand health insurance coverage and provide assistance to low- and moderate-income families. ... This amount represents only a very small portion of the cost of the coverage expansions and could be easily accommodated by making offsetting reductions in other discretionary spending programs.The second category of discretionary costs comprises authorizations for a variety of grant and other programs. ... The effect of these authorizations on total spending is highly uncertain. Congress traditionally authorizes spending for many discretionary programs at much higher levels than are actually appropriated; indeed, many authorizations are never funded at all. ... These authorizations do not have to be funded; health reform is not at all contingent upon them. Finally, as with the administrative costs of health reform, any amounts that are eventually appropriated for these authorizations will need to fit within the overall discretionary spending ceilings Congress sets.
So there you have it. No surprise costs, just the predictable requirement that Congress budget wisely in the face of limited resources. While the attempts to score political points with this report shouldn't surprise you, they shouldn't convince you, either.
-- Tim Fernholz
