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Deficit Reduction in the Second Decade Holding Up Health Care Bill

We all know way too much about the Congressional Budget Office at this point, but they continue to stand at the heart of the Democratic effort to pass health care reform. Jonathan Cohn explains that the delay in CBO numbers comes from their importance to meeting the needs of the budget reconciliation process. Basically, the House has not finalized the CBO scores yet because they have been confounded by how to meet the requirement of lowering the deficit beyond the original bill’s dictates in the second ten years of the budget window:

In order to satisfy the requirements for the budget reconciliation process, through which Congress will consider the amendments, CBO must certify that the changes will reduce the deficit both in the decade following enactment and the decade following that […]

Accomplishing that in the first decade isn’t so difficult. Basically, you figure out how much money it costs to improve the subsidies, to fill the Medicare drug donut hole, and to scale back the benefits tax. Then you increase the Medicare tax and maybe take a little more money out of the pockets of industry groups. It’s more or less as simple as taking from column A and then pulling an equal amount, plus an extra billion or two, into column B.

But the second decade, apparently, is another story. Officials and staff aren’t saying what the hang-up is; CBO, as a rule, doesn’t comment. But it’s safe to assume that it has something to do with the fact that small changes in the first ten years become much bigger changes in the second ten years, because of compounding effects. Remember, if you give people more financial protection against illness–a major goal of the amendments, not to mention reform as a whole–the economic models predict that, all else being equal, those people will consume more health care and, thus, spend more money.

This has pushed us into Wednesday, without CBO scores. And while that release is reportedly imminent, the problem having been solved, if Speaker Pelosi wants to hold to her pledge of posting the bill for 72 hours before passage, no bill could get a vote before Saturday, and probably Saturday night.

Most of the fixes sought in the reconciliation sidecar spend more money – closing the donut hole, increasing the subsidies, expanding the federal component in Medicaid expansion, delaying the excise tax. So something must plug the gaps to achieve the same deficit reduction under the rules (and that answers your question of why student loan reform, a deficit-reducer, entered the picture). We’ll get a look at that tonight, if all goes well.

So while rounding up the votes has delayed the process, the particular requirements of the CBO have also thrown a wrench into things. Lori Montgomery has more.

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David Dayen

David Dayen

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