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Is the House Health Plan Really Paid For?

Posted By Alison Acosta Fraser On July 22, 2009 @ 5:45 pm In Economics | Comments Disabled

Confused about whether the House health care bill, H.R. 3200, is deficit-neutral? No wonder. House Leadership maintains the bill will be “fully paid for and not contribute to the deficit.” [1] On the other hand, CBO [2] has said the bill will add $239 billion to the deficit over 10 years. Leadership’s statement is true, but only if you assume larger deficits every year.

Larger deficits are deficit-neutral? How can this be? Leadership says, simple! They will pass PAYGO legislation first, and health care reform second. PAYGO – a key policy objective of the Blue Dogs because it is supposed to keep the deficit from getting bigger – requires that any new entitlement spending (or tax cuts) must be paid for by new spending cuts (or tax increases), all measured against a current services baseline.

But Leadership has proposed PAYGO with a twist. They would legislatively move costs for “Docfix” – a legislative remedy increasing payments to doctors costing $228 billion over 10 years – directly into the PAYGO spending baseline. Their reasoning is that this is merely an extension of current policy and so should not be considered new spending, or – here’s the key – counted towards meeting PAYGO requirements. To be sure, the PAYGO baseline is in sore need of fixing [3], but this should be done consistently, not just for selective policies as this legislative fix would do it.

Here’s how it would work. First, the House would add an extra $228 billion to the spending baseline in the PAYGO legislation [4], which, under PAYGO rules, means the deficit is automatically allowed to be $228 billion bigger. Then, when the House considers the Health Care bill, this Docfix spending does not violate PAYGO because it’s already included in the baseline. And spending still goes up. So, the House bill is “paid for” and “deficit-neutral,” but only by accepting $228 billion more in deficit spending before the House even begins debate on the Health Care bill. So, the extra Docfix spending happens anyway, the deficit still goes up, and proponents claim the whole thing is paid for. Sounds like smoke and mirrors, doesn’t it?

So, just where are the Blue Dog fiscally conservative Democrats on this? Do the PAYGO champions agree with running up the red ink by $228 billion first, and then say the health plan is “paid for” (like first adding $228 billion to your Visa card and then pledging to pay for each additional charge)? Or have they just given up on the pledge to pay for health care? Time to tell us.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2009/07/22/is-the-house-health-plan-really-paid-for/

URLs in this post:

[1] “fully paid for and not contribute to the deficit.”: http://democraticleader.house.gov/in_the_news/press_releases/index.cfm?pressReleaseID=3214

[2] CBO: http://www.cbo.gov/ftpdocs/104xx/doc10464/hr3200.pdf

[3] PAYGO baseline is in sore need of fixing: http://www.heritage.org/Research/Budget/wm2019.cfm

[4] PAYGO legislation: http://thomas.loc.gov/cgi-bin/bdquery/z?d111:H.R.2920:

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