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The Democratic claim that Obama’s health-care cuts top Simpson-Bowles

at 06:02 AM ET, 11/29/2012


(Evan Vucci/Associated Press)

“The president's budget actually contains more health-care savings than the bipartisan Simpson-Bowles Commission does.”

— Rep. Chris van Hollen (D-Md.), on CNN, Nov. 27, 2012

 “He's got more health-care cuts than Simpson-Bowles proposed.”

— Van Hollen, on Fox News, Nov. 27

As lawmakers continue to tussle over solutions to the looming “fiscal cliff,” Democrats have tried to make the case that the Obama administration has been serious about a “balanced” approach that includes not just tax increases on the wealthy but also spending cuts.

 A typical example is Rep. Chris van Hollen, who served on the deficit reduction “super committee” and is the senior Democrat on the House Budget Committee.  In consecutive interviews on morning television shows this week, he claimed that the Obama 2013 budget actually had more health-care cuts than the Simpson-Bowles Commission,

 Simpson-Bowles, or more accurately the National Commission on Fiscal Responsibility and Reform, is of course considered by many in Washington as the model for a bipartisan approach — even though the commission actually failed to endorse the final report. Former Sen. Alan Simpson (R-Wy.) and former White House chief of staff Erskine Bowles, a Democrat, were the co-chairs of the 18-member commission.

 We take no position on whether implementing Simpson-Bowles would be good or bad, but clearly van Hollen is suggesting that Obama has been even bolder than the Simpson-Bowles approach. Does this claim pass the math test?

 

The Facts

 When we first queried van Hollen’s staff, they claimed that van Hollen’s statement was accurate because Obama’s fiscal budget for 2013 proposed about $364 billion in health care savings over the next ten years while the Bowles-Simpson Commission proposed $341 billion in health care cuts.

But the first rule of comparing budgets is to make sure you are actually measuring apples against apples. The Simpson-Bowles report, which was released in Dec. 2010, proposed a budget plan for the years 2012 to 2020. The Obama budget, released last year, proposed a budget for 2013 to 2022.

 Notice anything? The Simpson-Bowles budget is a nine-year plan, while the Obama proposal is a 10-year plan. That means the numbers need to be adjusted before any comparison can be made. (Some analysts, in fact, argue that Simpson-Bowles is actually an eight-year plan, because only a tiny amount of savings is realized in the first year, but for simplicity we will keep it at nine years.)

 Moreover, when you dig into the details of the Simpson-Bowles proposal (see Figure 17), it is clear that the overall health-care figure is deflated by $76 billion because of a proposal to repeal the Community Living Assistance Services and Supports program (CLASS Act).

The Obama administration has abandoned the CLASS Act, so the gross health-care cuts in Simpson-Bowles total $417 billion over nine years. That means the Simpson-Bowles health-care cuts are bigger even before any adjustments are made in the budget window.

Van Hollen’s staff then suggested we needed to exclude $73 billion in proposals that affected military retirees, federal employees and tort reform, and only look at cuts involving Health and Human Services programs. But that only gets Obama slightly ahead — before adjusting the budget windows.

(We should also note that the nonpartisan Congressional Budget Office gave a somewhat lower estimate for Obama health-care savings than the White House, so we are being generous in using White House figures.)

 How should we adjust the budget window? The easiest thing to do would be to lop off the 10th year of the Obama budget. The White House budget documents (see table S-9) show his health-care proposals would save $71 billion in 2022, so that brings the nine-year total to $291 billion.  

In other words, apples to apples, the original Simpson-Bowles budget is 43 percent bigger than Obama’s cuts. Simpson-Bowles is also higher if you only focus on HHS programs.

Obama health-care savings, 9 years: $291 billion

Simpson-Bowles health-care savings, 9 years: $417 billion

 Simpson-Bowles HHS savings, 9 years: $349 billion

 In 2011, Simpson-Bowles released updated figures to produce a 10-year budget. (This reestimate was not as specific so we cannot easily focus just on the HHS programs.) Here’s how those numbers stack up:

Obama health-care savings, 10 years: $364 billion

Simpson-Bowles health-care savings, 10 years: $487 billion

 Moreover, the left-leaning Center on Budget and Policy Priorities earlier this year calculated what the health-care savings would be if the Simpson-Bowles budget were extended to the same 2013-2022 time frame as the Obama budget. The conclusion:  $480 billion.

Richard Kogan, the CBPP analyst who wrote the report, said a gross health-care figure for Bowles-Simpson (minus the CLASS Act) would have been about $565 billion, but he said he had little faith in the quality of individual estimates over time, so the distinctions between gross and net savings had less meaning.

“It is clear that over 10 years, the administration’s total is smaller than the Bowles-Simpson total,” Kogan said.

 The Committee for a Responsible Budget also did its own analysis and concluded the appropriate 10-year comparison was this:

Obama health-care savings, 10 years: $300 billion

Simpson-Bowles health-care savings, 10 years: $475 billion.

Anyway, you get the picture. Simpson-Bowles is much higher than the Obama figure when the budget windows are lined up correctly.

 The disparity gets even larger if you compare single budget years, because much of the Obama savings are pushed far into the future. The Simpson-Bowles plan aims for “primary balance” (budget balance excluding interest costs) in 2015. Here are the health-care cuts in that year:

Obama health-care savings, 2015: $20 billion

Simpson-Bowles health-care savings, 2015: $46 billion

Simpson-Bowles HHS health savings, 2015: $38 billion

 Now let’s look at 2018, when the Obama budget claims to reach “primary balance”:

Obama health-care savings, 2018: $39 billion

Simpson-Bowles health-care savings, 2018: $61 billion

Simpson-Bowles HHS health savings: $51 billion

 After presenting this data to van Hollen’s staff, we received a call from the lawmaker. He explained that he had heard Gene Sperling, the director of the White House National Economic Council, make this comparison. “I was not trying to play games with the budget window,” van Hollen said. “I originally got this from Gene Sperling, and the way he said it was the same way I said it.”

Van Hollen argued that the White House proposals are significant because the health-care cuts were more or less equal with Simpson-Bowles at the end of the first decade — and then really kicked in during the second decade. “The president’s policies do not phase in until late in the 10-year budget window,” he said, noting some key provisions are aimed at new Medicare beneficiaries, not current beneficiaries.

Indeed, Sperling has written that Obama has “proposed larger long-term health savings ... than Bowles-Simpson.” (Our emphasis on “long-term.”)

Given that Congress can always step in and change things, we’re not sure it is good practice to be claiming savings more than 10 years down the road. Health-care provider cuts mandated in the Balanced Budget Act of 1997 are routinely deferred by Congress.

When The Fact Checker first started writing about the federal budget more than two decades ago, in fact, the budget window never extended more than five years. Then, for better or worse, 10-year budgets became the norm during the Clinton administration. Still, one could argue that permanent changes in health-care programs are different than discretionary spending, and thus a long-term outlook is informative.

“While that may well be true — and looks sensible, and uses the same approach to extrapolating  figures that we used in our analysis of [Simpson-Bowles] — we nevertheless cannot be sure that the administration figures surpass [Simpson-Bowles] after 2023,” Kogan said. “It merely seems extremely likely.”

 But in any case, this is not the argument van Hollen made on the television shows. He did not say “long-term” but instead referred to the “president’s budget” — which is only for 10 years.

 

The Pinocchio Test

We always appreciate it when a lawmaker gets on the phone and defends his math. Some might saying dropping a phrase such “long-term” is a relatively minor offense but as the ranking Democrat on the Budget Committee, van Hollen has a special responsibility to get his numbers right and speak with precision.

No matter how you add it up, Obama’s proposed health-care cuts in his budget are smaller than the ideas proposed in the Simpson-Bowles plan--at least in the first ten years. It is misleading to suggest otherwise.

If van Hollen wants to make a case for savings in the second decade, he should be more specific in interviews. We were tempted to give this Three Pinocchios, but then were persuaded that the long-term view gave a bit more credence to his assertion.

Two Pinocchios





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    About the Blogger

    Glenn Kessler has covered foreign policy, economic policy, the White House, Congress, politics, airline safety and Wall Street.

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