Why health reform will cost more than Democrats claim
Delayed benefits, immediate taxes
The bill raises $60 billion in taxes before any of the major benefits go into effect.i
96 percent of the benefits don’t start until 2014.ii
The CLASS Act is “a Ponzi scheme of the first order”
The CLASS Act appears to make the bill cost less than it does because, as CBO said, “the program
would pay out far less in benefits than it would receive in premiums over the 10-year budget
window,”iii raising $70 billion in premiums that will fund benefits outside the window.
Senator Conrad has called this “a Ponzi scheme of the first order.”iv
No doc fix
A 10-year doc fix will cost $371 billion according to the Administration, dwarfing the savings
claimed by Democrats from this bill.v
Raids Social Security
Relies on $29 billion in new Social Security revenue to achieve the appearance of deficit cuts – these
revenues are meant to pay Social Security benefits, not fund a new entitlement.vi
Savings are tiny compared to current deficits
Democrats claim this bill will save $143 billion over 10-years, an amount dwarfed by the $655
billion deficit so far this fiscal year or their $862 billion fiscal stimulus bill.vii
Double counts Medicare savings and revenues
Democrats claim the $529 billion in Medicare cuts and $210 billion in new Medicare taxes in the bill
will improve the solvency of the Medicare HI trust fund, but they use those same cuts and taxes to
pay for the enormous new entitlement in this bill.
This is double counting – either Medicare savings improve solvency or they pay for this bill, they
can’t possibly do both.
CBO has written that HI trust fund savings under this bill “would not enhance the ability of the
government to pay for future Medicare benefits.”viii
Relies on “unrealistic” budget cuts
The CBO score assumes that the $529 billion in Medicare cuts will be implemented, even though the
HHS Actuary said that the level of cuts was “unrealistic” and could “jeopardize access to care” for
seniors.ix
The score also assumes that Congress won’t intervene to block the cuts proposed by the Independent
Medicare Advisory Board. But a similar provision to implement Medicare cuts under fast track
procedures when general revenues were projected to cover more than 45 percent of overall Medicare
costs has never once been used.
Estimates past 2019 cannot be relied on
CBO only provides detailed estimates within the budget window, which ends in 2019. Outside the
budget window CBO says any calculation made “reflects the even greater degree of uncertainty”
regarding those years.x
The spending and taxes in this bill are back-loaded to take effect in 2020 and beyond, meaning this
bill’s effect on the size and scope of government is not clear from the CBO score.
Waits until 2020 to fully close the donut hole so it doesn’t score
The bill closes the Medicare Part D donut hole in 2020, a year not included in the score.
i JCT Estimated Revenue Effects of the Reconciliation Act of 2010, JCX‐16‐10, March 20, 2010
ii CBO letter to the Honorable Nancy Pelosi on the amendment in the nature of a substitute to H.R. 4872, the
Reconciliation Act of 2010, March 20, 2010
iii CBO Director’s Blog post on Long‐term Care Insurance, Novemeber 19th, 2010, at http://cboblog.cbo.gov/?p=425
iv “Proposed long‐term insurance program raises questions,” by Lori Montgomery in the Washington Post, October 27,
2009, at: http://www.washingtonpost.com/wp‐dyn/content/article/2009/10/27/AR2009102701417.html
v Budget of the U.S. Government, Fiscal Year 2011, Table S‐7, at:
http://www.whitehouse.gov/omb/budget/fy2011/assets/tables.pdf
vi See FN 2, Table 1
vii CBO Monthly Budget Review, March 4, 2010, at: http://cbo.gov/ftpdocs/112xx/doc11263/FebruaryMBR.pdf
viii CBO letter to the Honorable Jeff Sessions, January 22, 2010, at: http://www.cbo.gov/ftpdocs/110xx/doc11005/01‐
22‐HI_Fund.pdf
ix Letter from Richard S. Foster, CMS Chief Actuary on the Estimated Financial Effects of the Patient Protection and
Affordable Care Act of 2009,” December 10, 2009, at:
http://www.cms.hhs.gov/ActuarialStudies/Downloads/S_PPACA_2009‐12‐10.pdf
x See FN2.
