Monday, August 31, 2009

Making Health Care Reform "Deficit Neutral" Accomplishes Little--So Why Is That the President's Health Care Reform Budget Objective?

For me, one of the more amazing things about this health care debate is the way the press and many advocates of health care reform have accepted the notion that the fiscal objective should be to pass a health care bill that is "deficit neutral."

With health care costs unsustainable, why is that an appropriate goal?

Deficit neutral means that any impact of a health care bill on the federal budget would neither increase costs, nor would a bill decrease costs, from what they would have been without reform. So, if federal health care costs remain the same post-reform why would we expect the outcome to be any different for the rest of the system? Why shouldn't we believe that post-reform health care would cost the same $4.5 trillion and 22% of GDP we expect it would cost in 2018 anyway?

Now, the Democratic bills would bring in many millions of people who are uninsured today and that is a real benefit. But we would bring them into that same unsustainable system.

I was struck by a recent exchange between Senator Evan Bayh (D-IN) and Fed Chairman Ben Bernanke earlier this summer. In the second minute of the video link below, Bayh and Bernanke point out that any "deficit neutral" health care bill does not get at the "heart of the problem" and agreed we need to do more--we need "systemic reform."

Why then is "deficit neutral" the stated fiscal objective for the President and the Democratic leadership in their health care bills?

Video link
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