The Spectacle Blog

Now They Tell Us: CBO Double Counted Medicare Savings

By on 12.23.09 | 11:15AM

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.

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