Yesterday at the Blair House health summit, Rep. Paul Ryan (R-WI) directly challenged the White House’s deficit reduction claims. From the transcript:
Look, we agree on the problem here, and the problem is health inflation is driving us off of a fiscal cliff. Mr. President, you said health care reform is budget reform. You’re right. We agree with that. Medicare right now has a $38 trillion unfunded liability. That’s $38 trillion in empty promises to my parents’ generation, our generation, our kids’ generation. Medicaid is growing at 21 percent this year. It’s suffocating state’s budgets. It’s adding trillions in obligations that we have no means to pay for it.
Now, you’re right to frame the debate on cost and health inflation. And in September when you spoke to us in the well of the House, you basically said — and I totally agree with this — “I will not sign a plan that adds one dime to our deficits either now or in the future.”
Since the Congressional Budget Office can’t score your bill because it doesn’t have sufficient detail, but it tracks very similar to the Senate bill, I want to unpack the Senate score a little bit.
And if you take a look at these CBO analysis, analysis from your chief actuary, I think it’s very revealing. This bill does not control costs. This bill does not reduce deficits. Instead this bill adds a new health care entitlement at a time when we have no idea how to pay for the entitlements we already have.
And let me go through why I say that. The Majority Leader said the bill scores as reducing the deficit $131 billion over the next 10 years. First, a little bit about CBO. I work with them every single day. Very good people, great professionals, they do their jobs well. But their job is to score what is placed in front of them. And what has been placed in front of them is a bill that is full of gimmicks and smoke and mirrors.
Now, what do I mean when I say that? Well, first off, the bill has 10 years of tax increases, about half a trillion dollars, with 10 years of Medicare cuts, about half a trillion dollars, to pay for six years of spending. Now, what’s the true 10-year cost of this bill in 10 years? That’s $2.3 trillion.
It does a couple of other things. It takes $52 billion in higher Social Security tax revenues and counts them as offsets, but that’s really reserved for Social Security. So either we’re double-counting them or we don’t intend on paying those Social Security benefits. It takes $72 billion and claims money from the CLASS Act — that’s the long-term care insurance program. It takes the money from premiums that are designed for that benefit and instead counts them as offsets. The Senate Budget Committee chairman said that this is a Ponzi scheme that would make Bernie Madoff proud.
Now, when you take a look at the Medicare cuts, what this bill essentially does is treats Medicare like a piggy bank. It raids a half a trillion dollars out of Medicare not to shore up Medicare’s solvency but to spend on this new government program.
Now, when you take a look at what this does, it is — according to the chief actuary of Medicare, he’s saying as much of 20 percent of Medicare’s providers will either go out of business or will have to stop seeing Medicare beneficiaries. Millions of seniors who are on — who have chosen Medicare Advantage will lose the coverage that they now enjoy. You can’t say that you’re using this money to either extend Medicare solvency and also offset the cost of this new program. That’s double-counting.
And so when you take a look at all of this, when you strip out the double-counting and what I would call these gimmicks, the full 10-year cost of this bill has a $460 billion deficit. The second 10-year cost of this bill has a $1.4 trillion deficit.
And I think probably the most cynical gimmick in this bill is something that we all probably agree on. We don’t think we should cut doctors 21 percent next year. We’ve stopped those cuts from occurring every year for the last seven years. We all call this here in Washington the “doc fix.” Well, the doc fix, according to your numbers cost $371 billion. It was in the first iteration of all these bills. But because it was a big price tag, and it made the score look bad, made it look like a deficit, that provision was taken out, and it’s been going on as stand-alone legislation. But ignoring these costs does not remove them from the backs of taxpayers. Hiding spending does not reduce spending.
And so when you take a look at all of this, it just doesn’t add up. And so let’s just — I’ll finish with the cost-curve. Are we bending the cost curve down or are we bending the cost curve up? Well, if you look at your own chief actuary at Medicare, we’re bending it up. He’s claiming that we’re going up $222 billion — adding more to the unsustainable fiscal situation we have.
And so when you take a look at this, it’s really deeper than the deficits or the budget gimmicks or the actuarial analysis. There really is a difference between us. And we’ve been talking about how much we agree on different issues, but there really is a difference between us. And it’s basically this: We don’t think the government should be in control of all of this. We want people to be in control. And that, at the end of the day, is the big difference.
Now, we’ve offered lots of ideas all last year, all this year, because we agree the status quo is unsustainable. It’s got to get fixed. It’s bankrupting families. It’s bankrupting our government. It’s hurting families with preexisting conditions. We all want to fix this. But we don’t think that this is the answer to the solution. And all of the analysis we get proves that point.
Now, I will just simply say this — and I respectfully disagree with the Vice President about what the American people are or are not saying, or whether we’re qualified to speak on their behalf. So we are all representatives of the American people. We all do town hall meetings. We all talk to our constituents. And I’ve got to tell you, the American people are engaged. And if you think they want a government takeover of health care, I would respectfully submit you’re not listening to them.
So what we simply want to do is start over, work on a clean sheet of paper, move through these issues step by step, and fix them and bring down health care costs and not raise them. And that’s basically the point.
Ryan’s above numbers are from the Senate bill as it is currently before the House. James Capretta has done his own analysis of the President’s new plan released Monday and found a $2.5 trillion price tag:
The President argues that expeditious enactment of his plan is necessary to provide better services to the uninsured, but none of the key provisions to expand coverage would go into effect until 2014. Meanwhile, many of the spending reductions, such as the cut in Medicare Advantage payment rates, would kick in much earlier, as would the tax increases. Consequently, the President’s plan has 10 years worth of spending and revenue “offsets” paying for only seven years worth of spending.
Looking at these bills over a true 10-year window of full implementation reveals much higher costs. The Senate bill’s provisions–even excluding the “doc fix”–would total $2.3 trillion over the period 2014-2023, with the coverage provisions fully in place.[1]Adding the “doc fix,” the Obama team’s admitted $75 billion add-on, at least $90 billion in non-coverage spending, and $72 billion for the CLASS Act, the true 10-year cost of the President’s plan is almost certainly over $2.5 trillion.