On Monday, e21 sponsored a discussion, moderated by National Journal’s Major Garrett, between Charles Blahous and Jared Bernstein. The topic was Blahous’ recent paper entitled “The Fiscal Consequences of the Affordable Care Act” (published by the Mercatus Center of George Mason University). The full event can be viewed here.
Not surprisingly, the back and forth between Blahous and Bernstein was spirited and covered mainly familiar ground. Blahous repeated the main arguments from his paper, which is that ObamaCare will add hundreds of billions of dollars to the federal deficit over the next decade, contrary to official estimates. Bernstein then picked up many of the criticisms of paper that have appeared in blog posts and opinion columns from defenders of ObamaCare.
Blahous’ argument rests on the fact that ObamaCare’s supposed cuts in Medicare spending aren’t, in reality, cuts at all. They merely substitute for spending restraint (or tax increases) that would be required under law and happen anyway whenever Congress is faced with impending trust fund insolvency.
Bernstein countered that the baseline against which ObamaCare was measured is the same baseline both sides have used for many years. Changing the rules of the game at this point would have been both odd in a procedural sense and also a thinly veiled attempt by political opponents to scuttle the legislation with arcane rules instead of substantive arguments.
What this debate really comes down to actually relatively straightforward. Does extending the life of the Medicare Hospital Insurance (HI) trust fund, with spending cuts and tax hikes, result in new Medicare spending, or not? Because if it does, that would mean ObamaCare spent the Medicare cuts twice — once on future Medicare benefits, and a second time on ObamaCare’s coverage expansion entitlements.
It should be obvious that extending the life of the HI trust fund does authorize more Medicare spending. Otherwise, why does Congress worry about trust funds becoming depleted at all? Because, if Medicare benefits were going to be paid in full regardless of the status of the trust fund, all of this worrying by Congress about trust fund exhaustion would be completely misplaced. The truth is that Congress worries for good reason: trust fund depletion would mean Medicare benefits could not be paid in full. The fact that official baselines do not reflect this reality of trust fund law (for reasons that are themselves also rational) does not mean it isn’t so.