Three gimmicks that make Senate healthcare bill look better

Cost-cutting accounting tricks are a common feature of Washington legislation. The Senate healthcare reform bill may be no exception.

Gimmicks. Creative accounting. Smoke and mirrors.

Call them what you will, cost-saving manipulations are often included in big pieces of Washington legislation. And the Senate’s healthcare overhaul bill may be no exception.

True, the non-partisan Congressional Budget Office (CBO) judges that the sweeping legislation – which Senators may begin debating Saturday – would reduce the deficit by $130 billion over the next ten years.

But CBO’s number-crunching wizards have to work with the data they’ve been handed. And in putting the bill together, Senate Democratic leaders made a number of assumptions that critics say mask the bill’s true cost.

“They’re playing with the numbers here,” says Robert Laszewski, president of Health Policy and Strategy Associates, a Washington D.C. consulting firm.

Here are three aspects of the Senate bill that Laszeweski and others call gimmicks:

Revenues first, benefits later. Much of the money raised by provisions of the Senate health reform bill would begin flowing in to the US Treasury years before the government’s largest new health expenditures would begin.

For instance, fees levied on health insurers and some medical manufacturers would bring in $9 billion in 2010, according to the CBO. A new tax on high-premium health plans would start up in 2013, raising $7 billion that year.

But the big costs would not start until 2014, when the bill would fully take effect. That’s when government subsidies to help low- and middle-income families purchase health insurance would start, for instance.

The bottom line? Of the bill’s estimated $130 billion in deficit reduction, $98 billion would pile up prior to 2014, when the government would start paying subsidies.

Assume no meddling. The CBO’s assessment of the Senate bill, made in a lengthy letter to Senate Majority Leader Harry Reid, says that CBO analysts assumed the legislation would stay unchanged in coming years. But the assessment notes that the bill “would put into effect a number of procedures that might be difficult to maintain over a long period of time.”

That might be wonk-speak for “no way is Congress going to keep its mitts off this one."

Take doctor payments. The Senate bill assumes that payment rates for physician services under Medicare would go up in 2010 – and then be reduced by 23 percent in 2011. Would lawmakers really allow that to happen? Doubtful, say critics.

Class in session. The Senate bill would establish a new, voluntary long-term care insurance program – Community Living Assistance Services and Support, or CLASS.

This program would start taking in premiums right away, but would not have to pay out any benefits for some years to come. (See “Revenues first, benefits later,” above.) This income would help offset bill costs, making its fiscal impact look rosier.

By itself, this CLASS action would reduce the deficit by $72 billion through 2011, notes CBO.

In general, this sort of number-juggling often occurs when Congress is considering major pieces of legislation. President Bush’s tax cuts were enacted as temporary measures, set to expire after ten years, in part to mask their true cost in the future.

But deficit hawks remain concerned that the Senate health bill relies too much on gimmicks for its predicted reduction of the federal deficit.

“While this bill does a better job than the House version at reducing the deficit and controlling costs, it still doesn’t do enough,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, in a statement on the legislation.

See also:

Five questions that could decide the fate of healthcare bill

Senate Democrats backing down on tough anti-abortion measure

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