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Now They Tell Us: CBO Double Counted Medicare Savings

By Philip Klein on 12.23.09 @ 12:15PM

After allowing Democrats for weeks to argue that their Medicare cuts would both help finance the new health care legislation and extend the solvency of Medicare, the Congressional Budget Office explained today that the bill could do one or the other, but not both at the same time.

The new memo, released after Democrats have already secured 60 votes, reads:

The key point is that the savings to the HI (Medicare Hospital Insurance) trust fund under the PPACA (Patient Protection and Affordable Care Act) would be received by the government only once, so they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation or on other programs. Trust fund accounting shows the magnitude of the savings within the trust fund, and those savings indeed improve the solvency of that fund; however, that accounting ignores the burden that would be faced by the rest of the government later in redeeming the bonds held by the trust fund. Unified budget accounting shows that the majority of the HI trust fund savings would be used to pay for other spending under the PPACA and would not enhance the ability of the government to redeem the bonds credited to the trust fund to pay for future Medicare benefits. To describe the full amount of HI trust fund savings as both improving the government’s ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings and thus overstate the improvement in the government’s fiscal position.

Via Say Anything.

Sen. Jeff Sessions, after conversing with CBO director Doug Elmendorf, said that without the revenue from the Medicare cuts, the bill would actually increase deficts by nearly $300 billion, FoxNews reports.

"Either you've weakened the Medicare substantially or you're going to have no money to spend on the new program that's being created," Sessions said. "You cannot spend this money twice."

UPDATE: Here are some more thoughts from David Hogberg and Megan McArdle.

View all comments (26) | Leave a comment

jim park| 12.23.09 @ 12:47PM

we need to encourage small business participation by having massive layoffs and driving up the unemployment rates, have docs create rolling shutdowns and instituting citizen enacted lawsuits against the health reforms. thanks

Randy| 12.23.09 @ 2:09PM

Who's John Galt?

Atlas Srugd| 12.25.09 @ 5:29PM

Exactly right!

Jack Kinch(1uncle)| 12.23.09 @ 2:57PM

'After allowing Democrats for weeks to argue that their Medicare cuts would both help finance the new health care legislation and extend the solvency of Medicare, the Congressional Budget Office explained today that the bill could do one or the other, but not both at the same time'.
The bad thing here is that some people have to be told this and didn't already assume the obvious. We are dealing with Chicago crooks here

janranch| 12.23.09 @ 3:18PM

AHHHHH I SEE THE LIGHT. All day today I have been reading between the lines about this president now wanting to focus on the deficit and jobs. SOMEONE GOT TO HIM AND SAID YOU WILL NOT WIN THIS HEALTH CARE BILL SO START TALKING ABOUT THE DEFICIT. My god I thought Chicago crooks were invinsible, but very happy to say they are just plain ordinary crooks and are being found out for what they are. alexelrod, obama, and the biggest crook raum....

Eliis Wyatt| 12.23.09 @ 3:31PM

Someone send this to Joe Lieberman asap!

SteveMT| 12.23.09 @ 3:39PM

There is a special place reserved in Hell for these people, who deceive on such important issues. The Constitution is being spat upon by these people. The Budget Office is now complicit in these lies to the American People. Why did the Budget Office wait to set the record straight? May they all rot in Hell for destroying the best, albeit imperfect, health care system in the world. Welcome enslavement for us and future generations.

glenny| 12.23.09 @ 3:41PM

Medicare "savings (cuts)"? I'm in the healthcare industry. As Mcare reimbursements are cut, more and more providers will opt out of the Mcare program. Doctors will NOT continue to see more and more patients and get paid less and less. They will work less and get paid the same as they presently make.
Tell your elder relatives to brace themselves for when they CANNOT set up an appointment to see their doc. glenny

sre| 12.23.09 @ 3:47PM

I am a business lawyer with an MBA and 25 years experience in financial matters. But I have no earthly idea what that memo is attempting to clarify nor do I understand the "key point." I'm going to guess that most of the Democrat journalism majors who see it are going to be just as confused and therefore content to ignore it.

I suppose that is the whole point.

D J Beltran MD| 12.23.09 @ 4:52PM

Thank God you aren't my lawyer. It would seem that when dealing with real money it is not possible to rob Peter to pay Paul, then have Peter try to spend the money that was just stolen from his stash.

But then what could one expect from modern higher education. I know from having worked in one that medical education has no regard for students or patients, just go get a politically correct piece of th pigg and publish some numbers that agree with the politically correct goals of our legislators, currently referred to as 'Evidence Based Medicine. The only evidence that is presented by the funded research is the clear fact that the primary author knows his way around the NIH hierarchy. The NIH is the first successful political ploy of the take over of medical care plotted by FDR, scripted by Professor Edwin Witte, PhD and has existed as the guiding light of the left wing politicians since in the unrelenting march to a socialist dictatorship.

sre| 12.24.09 @ 9:30AM

But I thought the point was that Peter would just reimburse you less.

I'm not saying that's fair; I'm just saying that's what I hear when I hear about a Medicare cut.

I'm sure I lost the thread when they started referring to the magical trust fund.

bobc| 12.24.09 @ 8:40AM

There is something very wrong, when our politicians can keep ripping off tax payers and never be arrested...but if the normal citizen does things they are doing...you'd be in jail!

Pass the word - Democrats hate our elderly citizens, but love illegal aliens!

Ruler4You| 12.24.09 @ 9:45AM

Gee. It's almost as though politicians are lying. But, that can't be. Because we 'believe' in them.

Are Americans really this stupid?

gneubeck| 12.24.09 @ 10:41AM

"IF" Obama is successful in implementing his Socialized Health Care Reform -and- his commercially destructive Cap and Tax legislation, the economic recovery WILL BE aborted; and, this Nation WILL EXPERIENCE a double-dip recession; and, IN ALL PROBABILITY, an economic contraction far worse.
Fiscal circumstances which will be exacerbated by the pending expiration of the Bush tax cuts which, as a result of expanded child tax credits and earned income tax credits, reduced the share of individual income taxes paid by the bottom 40% of American taxpayers from 0% to -4%; and, took another ten million low income Americans completely off of the tax roles. The expiration of the Bush tax cuts will lead to a $2.4 trillion tax increase over the next decade.
One would instinctively ask: "Does the man NOT have the minimal economic acumen to realize that our struggling economy DOES NOT HAVE the resiliency to absorb such massive tax increases from these multiple societal adjustments at this precarious moment?". But, the question necessitates a failure to acknowledge that it's Obama's obvious intention to destroy the free-enterprise structure that has made America the most prosperous Nation in the history of mankind; and, to replace it with the Socialist structure from his native Kenya.
Obama is in fact the "Reparator In Chief"; and, will willingly resort to the thuggery techniques that he employed as a "Community Agitator" in Chicago to achieve his objectives. Take a moment, and reflect on the financial millstone that the Obama agenda is hanging on your children's future potential for achieving prosperity!
Obama's perverted view of American society is unequivocally reflected in his choice of the White House TSARS. Individuals who reflect some of the most radical extremist philosophies on the political scene. While refusing to be beguiled by the nebulous psychosis of "HOPE", each American should accept the obligation to research the background on Obama's TSAR corps. Research which will expose those who ridicule others "who cling to their Bibles", while they seek their own guidance from Mao's "Little Red Book".
Just minimal review verifies that the Obama agenda is anathema to EVERY patriotic America who reveres our Constitution; and, the heritage espoused by our founding fathers. Obama's Marxist psyche simply WILL NOT ACCEPT the concept of American "exceptionalism"; and, compels him to apologize for America's world status at every opportunity. And, belay the "racism" nonsense.
As noted in a recent Scottish cartoon: "Barackside WON'T cure your pimples as claimed; but, it sure as heck will deplete your wallet." ; and, unfortunately substantially more in the process.
If we are to preserve our cherished heritage, it's essential that we precipitate an electoral Tsunami in 2010. Concurrently, it's becoming increasingly likely that Obama will take the Democrat Party down with him. Good riddance. Greg Neubeck

Steve| 12.24.09 @ 4:05PM

I cannot say with astute moral clarity that we are living in a Democratic Republic. While our nation retains the framework that has kept it free for more than two centuries, a structural imbalance of power has all but transformed our union (if but temporarily) into a dictatorship. Since we live in the present (not the future or the past) we must be willing to acknowledge this fact. Our government violates the constitution, passes secret legislation, takes trillions of our dollars and redistributes it as they see fit, and now seeks to socialize medicine an attempt to gain more federal power, something that the mass majority of Americans are against. These decisions are being made against the will of the people, and our leadership is using the imbalance of power to pass laws that the people would never dream of passing. Any criticism of this is treated very harshly by those in power, including the chief instigator; The President of the United States himself, Barack Hussein Obama.

Many are looking forward to the next election to stop this madness, yet we must ask ourselves if we should even wait this long g to submit our States to this dangerous legislation. While it is obvious that the Republicans have an edge in the next election, we must also remember that there is a viable third party element that can split the vote, and beyond this, organizations such as ACORN and SEIU which will seek to keep Democrats in power by fraud. Either one of these things can cause complications which could lead to a majortity of Democrats retaining the office. The simple fact is that we cannot, at all cost, allow this legislation to pass, even if it doesn't kick in for four years. It is too encompassing, too intrusive, and too dictatorial. If the federal government passes this legislation, then the States should respond by Succession from the Union. Earlier last year this idea was floated by Gov. Perry, of Texas. Many excoriated him for this, and I agree the call was premature, but now, under this threatening legislation, I would argue that Succession would be valid, under the 10th Amendment of the United States. This legislation cannot be considered as equal to the creation of Social Security, or Medicare, and while we can argue to the constitutionality of the creation of these behemoths, this is much more all-encompassing, and much more opposed by the people of the United States, and because of this, we can argue that the legislation is in violation of the 10th Amendment due to the intrusion of the Federal Government into the States.

" The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people"--10th Amendment

Steve| 12.24.09 @ 4:16PM

Update: I stated: "This legislation cannot be considered as equal to the creation of Social Security, or Medicare, and while we can argue to the constitutionality of the creation of these behemoths, this is much more all-encompassing, and much more opposed by the people of the United States, and because of this, we can argue that the legislation is in violation of the 10th Amendment due to the intrusion of the Federal Government into the States."

I want to update this to state that the citing of the federal government's creation of Social Security and Medicare, to argue as to the constitutionality of healthcare reform would not be accurate, due to all-encompassing nature of socialized medicine and the opposition of the people, but also because it can be argued that the passing of Social Security and Medicare were unconstitutional even though they were passed, and the current legislation is just bringing to light the abuses of our federal government that have been occurring for decades now...abuses that must be addressed. So we cannot point to federal legislation that imposed social security and Medicare on the States because it can be argued that these were also in violation of the Tenth Amendment of the Constitution.

Dr A| 12.24.09 @ 6:42PM

Hello, Earth to conservatives? The memo did not say that they DID double-count the money. They didn't. It's explaining, in response to some Senator's query, why HE can't double-count the money.

Their estimate of deficit reduction in this latest memo is still ~ $130 billion, exactly as it was in the estimate they released on Dec. 19th.

Come on, conservatives, the bill is over two thousand pages long. There MUST be something that's ACTUALLY wrong with it --- some fault you can find that doesn't involve stuff you made up.

Surely?

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