O!bamacare-and-the-myth-of-rising-cost-estimates!

Following is an excerpt from "The Fact Checker" column by Glenn Kessler in today's Post.

The cost of the health-care law has been one of its most contentious issues. President Obama had said it would cost less than $1 trillion over 10 years, and promised it would reduce the deficit in that period. The law, as scored by the CBO, met those benchmarks, but critics have charged the bill was deliberately structured to reach that result.

Last week was the third time that CBO has provided an estimate for the cost of the health care bill. Each time, the number has been a little different because of various technical factors, and also because different budget windows are being used, such as 2010-2019, 2012-2019 or 2012-2021. The longer the budget window, the bigger the costs and the revenues, in part because the population is getting larger and the gross domestic product is expected to increase.

The Energy and Commerce Committee [chaired by Republican Fred Upton/Michigan] came up with its increase by mixing apples and oranges. It compared the gross cost of insurance coverage provisions calculated for 2010-2019 (that’s the $938 billion number) with new figures for a different budget window, 2012-2021 (that’s the $1.445 trillion figure.) That’s kind of like saying the cost of pizza went up by comparing last year’s price for a 12-inch pie with this year’s price for a 16-inch pie.

Debbee Keller, a spokeswoman for the committee, defended the committee’s math, saying, “The legislation was written to hide the true costs of the law — it delayed much of the spending, providing about six years of spending and ten years of ‘pay fors.’ ” The new estimate, she said, shows “about eight years of benefits and ten years of ‘pay fors.’ ” — and she said the price tag will get only bigger as time goes on. “We predict the full cost will actually exceed $2 trillion” once the bill is fully implemented over 10 years.

We do not find this argument compelling. Yes, certain provisions do not kick in immediately, but neither do many of the new taxes. The revenue estimate by the Joint Tax Committee shows that $58 billion of revenue is raised in the first four years, compared to $380 billion over the last six years. As mentioned before, the cost numbers also get larger in later years because of population and GDP growth.

The Wall Street Journal came up with its increase by comparing a different set of numbers: the net cost (which strikes us as more reasonable than the gross cost used by the House committee) for the same time period, 2012-2021, as estimated in February 2011 and March 2011. But the Journal failed to note that the CBO cost estimate in February was actually lower than its initial estimate last year, so the overall effect from last year to this year is minimal.

The CBO generally remains aloof from the political back-and-forth over its numbers. But late Wednesday, the CBO addressed this question in its Director’s Blog. It lined up the numbers for all three of its estimates and then made the following point, underlying it for emphasis:

“Over the eight-year period that is common to all three analyses (2012 through 2019), the latest estimate of the net cost of the coverage provisions ($794 billion) differs by only about 2 percent from the original estimate ($778 billion); the projected gross costs . . . differ by only about 4 percent over that period.”

In budget terms over such a long period of time, these differences amount to rounding errors.

As the CBO put it, again underlining its point: “The evolution of the estimates does not reflect any substantial change in the estimation of the overall effects of [the health care law] from what was projected in March 2010.”

The Pinocchio Test
Critics of the health care bill need to recheck their math. The CBO’s new numbers do not suggest any noticeable increase in the cost estimates.



For the complete article go to: http://www.washingtonpost.com/blogs/fact-checker/post/obamacare-and-the-myth-of-rising-cost-estimates/2011/03/24/ABn6JmRB_blog.html?hpid=z3