Posted by: Jeff | March 19, 2010

This. Is. Fiscally. Responsible.

The House has released the final bill it will be voting on – the Senate bill plus the package of fixes the Senate will need to pass via reconciliation. That means there are no more tweaks to be made. The Senate’s role at this point is merely to say “yes” or “no” to the package of fixes. This is the health care reform we will get, or we’ll get nothing at all. And here’s what it will do:

Legislation that covers 32 million people. A world in which 95 percent of all non-elderly, legal residents have health-care coverage. An end to insurers rescinding coverage for the sick, or discriminating based on preexisting conditions, or spending 30 cents of each premium dollar on things that aren’t medical care. Exchanges where insurers who want to jack up premiums will have to publicly explain their reason, where regulators will be able to toss them out based on bad behavior, and where consumers will be able to publicly rate them. Hundreds of billions of dollars in subsidies to help lower-income Americans afford health-care insurance. The final closure of the Medicare Prescription Drug Benefit’s “doughnut hole.”

If you’re a conservative House Democrat, then probably you support many of those policies, too. But you also get the single most ambitious effort the government has ever made to control costs in the health-care sector. According to the Congressional Budget Office, the bill cuts deficits by $130 billion in the first 10 years, and up to $1.2 trillion in the second 10 years. The excise tax is now indexed to inflation, rather than inflation plus one percentage point, and the subsidies grow more slowly over time. So one of the strongest cost controls just got stronger, and the automatic spending growth slowed. And then there are all the other cost controls in the bill: The Medicare Commission, which makes entitlement reform much more possible. The programs to begin paying doctors and hospitals for care rather than volume. The competitive insurance market.

And what about this bill’s effect on the budget? The Congressional Budget Office has released its score, and according to them this reform will save $130 billion in its first ten years – which is to say, it will cost-cut or raise $130 billion more than it will spend – and up to $1.2 trillion in its second ten years. Since these are predictions and involve an inherent amount of uncertainty, especially in the second ten years, I think it’s important to emphasize that these numbers represent something close to a worst case scenario prediction.

Remember, when the CBO makes a projection for how much a program will cost over time, it isn’t just spitting out a single number. It’s giving a range of numbers. It’s typically the midpoint that you hear about, but there’s always a chance that the number will be higher or lower, by a certain interval. And, in order to play it safe, CBO decided it would judge health care reform based on the worst possible estimate within that interval.

So suppose, just to use some hypothetical numbers, the CBO ran the numbers and determined that the Democrats’ bill would probably save $1 trillion over ten years, but that the range of possible estimates was between saving $2.25 trillion and losing $250 billion. I’d say that’s pretty good odds: It’s far more likely you’ll save money and the possible savings are far bigger than the possible increase in the deficit.

CBO would have disagreed. If there’s a statistically significant chance that the bill would cost $250 billion, they would have said they can’t declare that the bill won’t inflate the deficit. The only way to get CBO approval would have been to modify the bill, so that the CBO determined it was likely to save $1.25 trillion but determined even the worst-case, most pessimistic scenario wouldn’t drive up the deficit.

Put simply: This bill is the largest expansion of health insurance coverage in decades. It will make our health care system significantly more humane and compassionate. It will put in place reforms that many experts believe will begin to slow our country’s astronomical growth rates in health care costs. And under the most pessimistic predictions of the CBO – already a rather conservative institution by all accounts – it will do all this without adding to the deficit. It’s really a stunning achievement of legislative craftsmanship.

I’ve said this before, but I’ll say it again: the argument that this bill is fiscally irresponsible does not have a leg to stand on. None at all. Zip. It now rests totally and completely on whatever free-floating, gut-level, unthinking anti-big-government sentiment the Republicans and conservatives can gin up in the populace. (Regrettably a good amount, by the looks of things.) But when they profess certainty that this bill will not work as advertised, that its structures will break down, that it will inevitably add to the deficit and drive up costs, they will have no evidence to point to. All the actual numbers and analysis support the other side’s case.

Now, it could still turn out that the Republicans and conservatives are right. After all, nothing is certain. But the odds that they are right are small, and anyone who would insist that this mere possibility should be enough to damn the bill will be applying a standard no reasonable human being has ever or would ever apply to legislation. You do not judge attempts at reform by comparing them to some theoretical ideal. That is a recipe for never reforming anything all. You judge reforms by comparing them to the reforms that have come before, since that is what gives you a real-world context for judging results and the range of the possible. That is how you determine what is and isn’t responsible. And here’s how this attempt at reform stacks  up against past reforms in health care:

The Medicare Prescription Drug Benefit didn’t try to offset its costs. It just increased the deficit. And Medicare and Medicaid were passed in the days before the Congressional Budget Office even existed. For health-care reform, Democrats have gotten the toughest scorekeeper in Washington to bless their effort, and though many don’t think that’s good enough, it’s a lot more than anyone else has ever done.

More from Ezra Klein on that same theme here. If anyone wants argue against this bill in terms of philosophy – that big government is bad even when it works – or in terms of morality – that wealth redistribution is wrong even when it helps people – that’s fine. But those are arguments over values. They should not be conflated with the argument over whether this bill is fiscally responsible, which is not an argument over values. It’s an argument over data and empirical predictions and objective standards. And it’s an argument that is now settled.

On a completely separate note, I’m currently doing my own personal fiscal situation no favors by spending a weekend in Vegas. So my blogging schedule will be a bit erratic. (Rather, more erratic than usual.) Happily, the Monte Carlo comes with free Ethernet, so I’ll be able to keep up with the health care vote, which should come Saturday or Sunday. We’ll see how my luck stacks up against reform’s.

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