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Friday, December 14, 2007
CBO Releases Long-Term Budget Outlook, CBPP Makes Misguided Statement
CBO released its long-term budget outlook yesterday. Here's CBO Director Peter Orszag's testimony and the report itself. Key excerpt:
The rise in health care spending is the largest contributor to the growth projected for federal spending. Therefore, efforts to reduce overall government spending will require potentially painful actions to slow the rise of health care costs. There may be ways, however, in which policymakers can reduce costs without harming the health of Medicare and Medicaid beneficiaries. Changing those programs in ways that reduce the growth of costs—which will be difficult, in part because of the complexity of health policy choices—is ultimately the nation's central long-term challenge in setting federal fiscal policy.
You'd think that the fiscal policy community would respond to this message by calling for a redoubled effort into controlling health care costs. But to Robert Greenstein, executive director of the Center on Budget and Policy Priorities, the long-term outlook means that we should focus our efforts on enforcing PAYGO budgeting rules.
Moreover, enforcing Pay-As-You-Go rules — and paying for any tax cuts Congress elects to extend (and any entitlement increases) — is within policymakers' power. In contrast, as CBO explains, we probably won't be able to secure the needed reductions in projected Medicare and Medicaid costs without causing serious harm to low-income and elderly patients unless we can slow cost growth throughout the entire U.S. health care system. And while this is the nation's most important fiscal challenge, there is currently no consensus among health care experts about how to accomplish it; achieving such a consensus and fully implementing the appropriate policies could take years or decades.
Why doesn't he ask to speed this process up? Put more money into research, experiment with incentives, implement what the research has already found, ANYTHING that would actually solve the problem, instead of just keeping it from getting worse. He could be asking Congress to both enforce PAYGO and reduce costs. But he clearly prioritizes PAYGO way over trying to control costs now, I guess because he thinks there's nothing we can do. There's plenty to do.
Plus, waiting around for a consensus seems pretty silly. There's no consensus on what to do about a lot of things- basically everything. And the consensus is often wrong. It wasn't that long ago that there was a consensus that the only way to close the long-term budget gap was to raise taxes and cut benefits.
This attitude won't solve the problem. It's a recipe for a continuation of the status quo. At least Orszag gets that much greater emphasis needs to be put on containing health care costs, because that's the most important problem, and not enough is being done about it. Why doesn't CBPP get that we CAN do something about health care costs now? Am I missing something?
Posted by Matt Lewis
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