This Still Makes Sense

by Eric Martin

Note to politicians in Washington: If you want to reduce the budget, vote for the public option. From the CBO (via Matt):

CBO estimates that the public plan’s premiums would be 5 percent to 7 percent lower, on average, than the premiums of private plans offered in the exchanges. The differences between the premiums of the public plan and the average premiums of private plans would vary across the country because of geographic differences in the plans’ relative costs. Those differences in premiums would reflect the net impact of differences in the factors that affect all health insurance premiums, including the rates paid to providers, administrative costs, the degree of benefit management applied to control spending, and the characteristics of the enrollees. [...]

CBO and the staff of the Joint Committee on Taxation (JCT) estimate that the proposal would reduce federal budget deficits through 2019 by about $53 billion. That estimate includes a $37 billion reduction in exchange subsidies and a $27 billion increase in tax revenues that would result because a greater share of employees’ compensation would take the form of taxable wages and salaries (rather than nontaxable health benefits). Those changes would be partly offset by an $11 billion increase in costs for providing tax credits to small employers. (The proposal would have minimal effects on other outlays and revenues related to the insurance coverage provisions of PPACA.)

Tastes great.  Less filling.

Comments

[hairshirthedonist]

But many of the actuaries now working for health-insurance companies would have to find new employment, just as tax-code simplification would lead to accountants and tax lawyers needing to find new jobs. Unemployment's bad enough as it is. And all the other jobs are already being done by Mexicans. The result: tax revenues down, welfare payments up, deficit increases, debt goes up, confidence falls according to the Ricardian Equivalence, the Paradox of Thrift kicks in even more, more people lose their jobs, deflation, mass riots with the accompanying murderous and destructive mobs, a military coup ensues, martial law and fascism follow and we all lose. Try again, Eric Martin. Fail!

Well, that or insurance costs go down. Either way.

[Brett Bellmore]

My confidence in CBO estimates is somewhat reduced by the knowledge that the CBO is legally required to estimate based on any assumptions Congress directs. For example, the CBO is legally required, by the Congressional Budget act, to use the Joint Committee on Taxation's revenue estimates, even if they think they're hooey.

So, in the end, the CBO is not an independent source of information. It's just reading from Congress' script.

[hairshirthedonist]

But, Brett, if you're going to make that argument, shouldn't you make it with specifics? Shouldn't you demonstrate that your general point applies to this specific situation based on specific facts? Or can you just blow the CBO off based on your proposed generality? Otherwise, shouldn't we simply ignore the CBO completely, no matter what, in every case in which they issue an opinion? Or is this just a convenient case for you to dismiss the CBO because you don't like what they're saying?

Or maybe your "confidence is just somewhat reduced," leaving everyone reading your comment to guess what you're really saying. Then again, you write that "it's just reading from Congress' script."

So, is the CBO just a puppet, or is the CBO subject to some undefined level of influence, be it great or small? Is it a constant or a variable? Is it a bias or an agenda?

I feel so uncertain. Please help.

[bobbyp]

Bellmore,

Your assertions are simply not true.

If you ever cite a CBO estimate in the future, I guess we are free to simply state that you are "reading from Congress' script" and write you off as just another lackey.

[Marty]

More important than the idiosyncracies of CBO estimates, this has very little information in it. Is the 5-7% less than private insurance meaningful? Does the existence of the public option make private insurance 10% more expensive? Is it really saving anyone money? Are there any other impacts that would cost more than 53B over 9 years? What assumptions are made, does it count the reduction in Medicare/public option rates to doctors?

Sounds great, doesn't really say much.

[Phil]

Guys, guys, you're being too hard on Brett. As he said recently, when someone provides numbers, and then, rather than attacking the numbers, someone else attacks motives instead, he "gets his hackles up." Therefore, he . . . wait a minute, I lost my place.

Oh, wait, I found it: Brett is a big fat hypocrite who changes his "principles" more often than a baby changes diapers. Ignore him.

[Eric Martin]

Marty, did you read the whole report?

[Marty]

Eric,

I read the blog you linked to, it tied the initial rates to Medicare, but didn't specify what those would be. Beyond that you quoted the section on their estimates but when they talked about how many would be covered etc. I found this

Given all of the factors at work, however, those estimates are subject to an unusually high degree of uncertainty.

to be just a informative.

[liberal japonicus]

Err, Phil, the knobs do go up to 11, but you don't have to turn them up that far...

[Brett Bellmore]

http://www.jct.gov/x-1-05.pdf>OVERVIEW OF REVENUE ESTIMATING PROCEDURES AND
METHODOLOGIES USED BY THE STAFF OF THE
JOINT COMMITTEE ON TAXATION (PDF)

"The Congressional Budget Act of 1974 (“the Budget Act”), as amended, stipulates that revenue estimates provided by the Joint Committee staff will be the official estimates for all tax legislation considered by the Congress."

"... The baseline assumes that present law remains unchanged during the
10-year budget period. ... In providing conventional estimates, the Joint Committee staff assumes that a proposal will not change total income and therefore holds Gross National Product (“GNP”) fixed. ..."

I repeat, the CBO is required, by law, to use Congress's revenue estimates as a basis for it's calculations, even if they think they're hooey. They're not allowed to say, "Everybody knows it will be politically impossible for you to do X, you've put off doing it several years in a row already." They're not allowed to say, "Passing Y will cause the economy to tank."

They're not allowed to disagree with Congress about anything, pretty much. They're Congress' official sock puppet, by law.

[Carleton Wu]

So, in the end, the CBO is not an independent source of information. It's just reading from Congress' script.

There are two distinct things. 1)Congress sets inputs that you think are invalid or 2)the CBO itself puts the thumb on the scale.

I agree with 1 in at least some cases, but not very much with 2. But the thing about point 1 is that you don't have to make a general attack on the CBO- since Congress's only way to jiggle the numbers is to explicitly jiggle the inputs, it's easy to make a specific critique.

For example, I havent read the report, but by the accounts Ive read, Rep Paul Ryan submitted a budget to the CBO including tax code changes, but directed them to assume that revnues would remain at 19% of GDP. cite.
So I don't have to talk trash about the CBO to talk trash about his requested report.

[Phil]

See, Brett, the thing to do here, if you were in fact inclined to follow your own (hahaha) "principles" (snort, cough), is to explain your objections to Congress's revenue estimates, not to keep bitching about what the CBO is and isn't allowed to do. The fact that you haven't, and apparently won't, means you can't, which means that Congress's revenue estimates and the CBO report are accurate.

I repeat, you're a hypocrite. You have a golden opportunity here to show what's wrong with the numbers, and you can't, so you resort to questioning motivations.