–Partisan Debate Helps Deepen Uncertainty About Fiscal Consequences
–Democrats Argue Program Is Fully Paid For, Fiscally Sound
–Republican Leader Calls Health Care Bill A ‘Fiscal Frankenstein’
–Budget Experts Say Plan’s Fiscal Bottom Line is Uncertain

By John Shaw

WASHINGTON (MNI) – During the politically brutal, procedurally
complex year-long battle for health care reform, neither Democrats nor
Republicans displayed public uncertainty about the emerging legislation.

Especially in recent weeks, Democrats, brandishing a preliminary
assessment by the Congressional Budget Office, said their plan would
expand health insurance coverage to 32 million additional Americans
while actually reducing U.S budget deficits over the next 20 years.

House Majority Leader Steny Hoyer called it one of the largest
deficit reduction plans that Congress has considered in decades.
Republicans said the Democratic plan was a fiscal nightmare. They
dismissed the CBO report as a tentative assessment that was based on
unrealistic assumptions built on the tenuous premise that future
Congresses will fully implement the tax increases and spending cuts that
are imbedded in the new law.

Rep. Paul Ryan, the ranking Republican on the House Budget
Committee, said the plan was a “fiscal Frankenstein” that includes
several new entitlement programs–just as a new commission is beginning
work to help overhaul the massive cost of existing entitlements.

The new health law will cost nearly $1 trillion over a decade. It
will be paid for by a mix of Medicare savings, an excise tax on high
cost insurance plans and surtaxes on the income of the wealthy.

The CBO said the new health care plan would reduce budget deficits
by $143 billion over a decade and more than $1.2 trillion in the second
ten years.

Bob Bixby, executive director of the Concord Coalition, said it is
almost impossible to accurately project the fiscal consequences of the
new health law.

“I would not look at this as deficit reduction bill. I would look
at this as an insurance expansion bill that Congress tried to pay for.
But we really don’t know if they have. There is so much that is going on
in this bill and its bottom line will be determined by the actions and
responses of patients, doctors, hospitals, insurance companies, state
governments and others,” Bixby said.

“There is no way to know at this time what it’s fiscal bottom line
will be. Any certainty in predicting this is not warranted,” he added.

Bixby’s group, thee Concord Coalition, issued a report last week
that raises budget concerns. It said achieving Medicare savings will be
difficult and that the bill creates cost control strategies and projects
that could work–but are not certain to.

“These may bear fruit at some future point but success is far from
certain. It will require concerted and cooperative efforts by state and
federal officials, hospitals, doctors, insurance companies and millions
of patients. It will also require the political will to make the savings
stick why they begin to pinch,” it said.

The budget group said that while the CBO deficit estimates “offer
some reassurance about the legislation, there is a great deal of
downside risk that these projections will prove to be optimistic.”

“And even is everything goes according to plan, the promised
deficit reduction will be quite modest compared to the trillions of
dollars that current projections indicate the country will add to its
debt in the coming decade,” the budget group said.

Stan Collender, a budget expert at Qorvis Communications, agreed
that the fiscal consequences of the health law are uncertain.

“The overall package was pretty solid from a fiscal perspective.
Not perfect, but not bad. Probably a little better than most expected,”
he said.

“But how this works going forward is very hard to say. You got a
plan that affects 17% of GDP, more than 300 million people. We don’t
know how the economy will perform in the future. We don’t know how
business and consumers will react to the changes in incentives. We don’t
know how the pilot programs and the demonstration projects will work out
in terms of cost savings,” he said.

Robert Reischauer, a former director of the Congressional Budget
Office, said Monday on a conference call with reporters, that while
there is a great deal of uncertainty about the fiscal effects of the
health care law, it is wrong to assume all surprises will be negative.

He said many health experts believe the CBO’s estimates are “too
cautious or too conservative” about the degree of cost savings that may
occur under the new law.

It is very possible, Reischauer said, the new health law could
“reduce the deficit more” than the CBO estimates suggest.

** Market News International Washington Bureau: (202) 371-2121 **

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