The New York Times ran a front page story on Sunday that could have been a case study of why it is essential to put budget numbers in context. The article, "Medicaid Rule For Immigrants May Bar Others," explains how new rules intended to prevent illegal immigrants from getting Medicaid may also prevent many eligible beneficiaries from getting assistance. The problem is that many low income people don't possess the necessary documentation (e.g. drivers licenses or birth certificates) needed to receive Medicaid under the new rules.
The key flaw in an otherwise excellent article is the brief reference to the potential budget savings from the new rules. The article reports that the Congressional Budget Office projects the savings as $220 million over five years and $735 million over ten years.
Many readers may have been misled into thinking that this is real money. The projected savings are equal to 0.0015 percent of projected spending over the next five years and 0.0022 percent of projected spending over the next decade. Or, in Brad DeLong's formulation, of the $49,800 per person that the federal government is projected to spend over the next five years, the new rules are projected to save approximately 73 cents.The context here is crucial, because it tells readers that this rule is not about saving taxpayers money. The cost of Medicaid benefits improperly provide to illegal aliens is trivial. People may still be upset that immigrants who are not in this country legally are getting health care benefits from the government, and therefore support this crackdown. But it is important for them to realize that this measure will have no visible effect on their taxes or the government's finances. Most Times readers probably do not realize this fact simply because they have no idea how unimportant a savings of $220 million over five years is.
--Dean Baker
