Health reform savings not a pipe dream, says policy group

Opponents of the health reform legislation have been vocal in criticizing the savings projected by the Congressional Budget Office (CBO) as the result of budgeting gimmicks and trickery rather than actual savings to be realized. However, health reform will result in reduced spending, says the Washington, DC-based Center on Budget and Policy Priorities (CBPP), a liberal-leaning fiscal policy research group which offers a claim-by-claim refutation of reform critics, according to the New York Times' "Prescriptions" blog.

For example, critics claim that health reform hides long-term deficit increases by front-loading revenues and back-loading spending. However, "in claiming that health reform front-loads revenues and back-loads spending, critics selectively cite just a few provisions and fail to consider the legislation as a whole," says the CBPP. "The assertion that short-term gimmickry covers up long-term deficit increases is flatly contradicted by CBO's assessment that the legislation will reduce the deficit in its second ten years and in subsequent decades."

Critics also charge that health reform doesn't "bend the cost curve" because extending health coverage to 32 million uninsured people actually increases costs. These critics are confusing the short-run and longer-run effects of health reform, says the CBPP. "Because people who lack health insurance use fewer healthcare services, expanding insurance coverage will, by itself, increase healthcare spending in the short term. It is therefore no surprise that the chief actuary of the Centers for Medicare & Medicaid Services [CMS] has estimated that the health reform legislation--which will extend coverage to two-thirds of the uninsured--will increase national health expenditures by 1.7 percent in 2016, when its coverage expansions will be fully phased in."

However, "the CMS actuary also finds that health reform will indeed slow the rate of growth of national health expenditures after an initial increase," says the CBPP. "Furthermore, CBO estimates that by the decade after 2019, the total federal budgetary commitment to healthcare--the sum of net federal outlays for health programs and tax preferences for healthcare--will be lower than it would have been if the health reform legislation were not enacted."

To learn more about projected reform savings:
- read the New York Times' "Prescriptions" blog
- here's the CBPP report