It’s all about the budget window, baby

August 15, 2012

Yesterday I wrote a post explaining how the Affordable Care Act cuts $716 billion in Medicare spending. Reader Brendan Riley asks how the Medicare cuts grew from $500 billion - the number Republicans seized on during the 2010 midterms - to $716 billion this time around.

An excellent question, given that nothing actually changed about the Affordable Care Act in the past two years. What did change, however, is the decade-long window that the Congressional Budget Office uses to evaluate the law's impact. Now that it's looking a bit further into the future, the Medicare rate cuts have a bigger impact.

Let's unpack that a bit. Back in 2010, the Congressional Budget Office was evaluating the impact of the Affordable Care Act between 2010 and 2019. It found the law would reduce Medicare spending by $455 billion over that time period. Since some cuts don't take affect for a few years - and others start small and get bigger - there's not much in the way of spending reductions over the first few years.

This time around, the budget window has moved further back in time. It now stretches from 2013 until 2022. And over that period, the CBO says that Medicare spending will be $716 billion lower than without the Affordable Care Act.

In short, nothing has changed about the Affordable Care Act. But a lot has changed about the time period we're using to evaluate its impact on the budget.

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Dylan Matthews · August 15, 2012