On Monday morning, a week ago, the Congressional Budget Office predicted that, for most people, insurance would cost the same or less if the Senate's health care reform bill passes. By the afternoon, critics of health care reform rushed to the microphones, claiming vindication. CBO, these critics insisted, had determined reform would mean higher costs!
What happened? The simple answer is that the critics were being deliberately deceptive. And they almost certainly were. But there's also a more complicated answer. The critics were taking advantage of widespread confusion over the definition of cost--a confusion that has been hanging over this debate for the last few months and is continuing to distort it.
Until now, the CBO, which is Washington's official scorekeeper, has been assessing reform proposals largely on the basis of how they would affect the federal budget. And whenever CBO has issued one of its assessments, critics have focused largely on CBO's estimates of government outlays--that is, the amount of money a bill would require Washington to spend on expanding government health insurance programs or providing people with financial assistance to buy insurance.
These numbers inevitably sound big. Most of the bills CBO has analyzed have called for outlays in the neighborhood of $1 trillion over 10 years. And while that figure represents just a fraction of the total federal budget--government outlays for the same period will be more than $40 trillion--it still represents an increase in what Washington will be spending. That's bound to upset anybody whose primary concern is the size of government.
But sometimes government needs to grow, in order to take on responsibilities the private sector can't handle on its own. And when that's the case--as it seems to be with health care--the only relevant question is whether an initiative adds to the federal deficit. Here, the news has been largely good. The bill before the Senate now would raise some tax revenue while finding savings in other government programs. The net result, according to CBO, would be lower deficits overall. (It reached a similar conclusion about the House bill.)
Of course, that's not the end of the story. The most important issue for most Americans isn't what the government spends on health care. It's what they, as individuals and families, spend on health care. That's the question the CBO finally addressed this week--although the findings were, in fairness, a bit hard to follow.
The vast majority of Americans with private insurance get coverage through employers. For these people, CBO predicted, premiums would stay about the same or come down a bit if the Senate bill became law. That wouldn't be the $2,500 in annual savings that President Obama famously promised during the campaign. But it also wouldn't be the huge hike in premiums critics had been predicting.
Where the price of health insurance would start to change radically is in the non-group market--that is, for people who buy on their own, as individuals, rather than through an employer. Premiums for these people, who number a little more than 30 million, would tend to go up. That's one of the points reform critics seized upon in their press conferences.
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