Friday, November 20, 2009

Substantial Uncertainty

The House has passed a health reform bill, the Senate is about to consider one, and both the Congressional Budget Office and the Centers For Medicare and Medicaid Services have weighed in on the budgetary effects of both bills.

The conclusions of the CBO and CMS? In one word, uncertainty.

Regarding the House bill, the actual future impacts of the Affordable Health Care for America Act, H.R. 3962, "are very uncertain," according to a November 13 memorandum from Richard S. Foster, the chief actuary of the CMS, which estimates the financial and coverage effects of the non-tax provisions in the proposed legislation.

In addition to echoing an earlier report from the CBO that called budget estimates "subject to substantial uncertainty," the CMS memorandum notes that:

"The legislation would result in numerous changes in the way that health care insurance is provided and paid for in the U.S., and the scope and magnitude of these changes are such that few precedents exist for use in estimation. Consequently, the estimates presented here are subject to a substantially greater degree of uncertainty than is usually the case with more routine health care proposals."

And here is what the CBO says regarding H.R. 3590, the Patient Protection and Affordable Care Act:

“The direct spending and revenue effects of enacting the Patient Protection and Affordable Care Act would yield a net reduction in federal deficits of $130 billion over the 2010-2019 period. That estimate is subject to substantial uncertainty….

“A detailed year-by-year projection for years beyond 2019, like those that CBO prepares for the 10-year budget window, would not be meaningful because the uncertainties involved are simply too great….

“CBO expects that the bill, if enacted, would reduce federal budget deficits over the ensuing decade relative to those projected under current law—with a total effect during that decade that is in a broad range around one-quarter percent of GDP. The imprecision of that calculation reflects the even greater degree of uncertainty that attends to it, compared with CBO’s 10-year budget estimates.”

In other words, we don’t really know.  And I think that is a good admission, given the hundreds and hundred of variables over decades that could change any number of budgetary calculations. We all need to admit that the results of complex legislation, whether it involves health care, troop buildups, or welfare reform, are nearly impossible to predict.

For example, all of the CBO estimates done on health reform proposals estimate the number of individuals who will join health care exchanges and the net increase (or decrease) in employer coverage or individual coverage outside of exchanges. Regarding H.R. 3950, the CBO says, 3590 states, “About 25 million people would purchase their own coverage through the new insurance exchanges, and there would be roughly 15 million more enrollees in Medicaid and CHIP than is projected under current law. Relative to currently projected levels, the number of people purchasing individual coverage outside the exchanges would decline by about 5 million, and the number obtaining coverage through their employer would also decline by about 5 million.”

Maybe yes, maybe no. As the CBO says, this is “subject to substantial uncertainty.”


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