Charge That Health Reform’s Supporters Are Double-Counting Medicare Savings is Nonsense

August 6, 2010 at 12:40 pm

The National League’s home run leader, Washington Nationals slugger Adam Dunn, hit two homers on Wednesday in the Nats’ 7-2 win over the Arizona Diamondbacks.  What would you do if a disgruntled Diamondback suggested that Major League Baseball should not count those homers toward his individual home run total and toward the Nats’ run total in their 7-2 win because, somehow, this amounted to “double counting”?  You’d laugh, right?

Well, that’s the same logic that some critics of the health reform law (i.e., the Affordable Care Act) are applying to the conclusion in the new Medicare’s trustees report that the “outlook for Medicare has improved substantially because of program changes made by” health reform.  The critics have resurrected an old charge that counting the health reform savings in Medicare’s Hospital Insurance (HI) Trust Fund toward both reducing the overall federal budget deficit (or offsetting the costs of other provisions in health reform) and improving the outlook of the HI’s Trust Fund reflects “double counting.”

Nonsense.  The outlooks for the budget and for the HI Trust Fund are two different things (as are Dunn’s batting statistics and the Nats’ run total for a particular game).  Some changes in law may affect one and not the other.  But other changes, such as changes in spending and revenues for Medicare HI or Social Security, affect both.

Under longstanding federal budget and accounting rules, the effects of provisions such as health reform’s Medicare HI changes are incorporated both in deficit projections for the federal budget as a whole and in the financing for the HI trust fund.  This is nothing new.

That’s what happened when the Republican-controlled Congress included HI changes in the 2005 budget reconciliation legislation (consisting of two bills) that reduced spending in Medicare and a number of other programs, cut taxes, and increased the deficit overall.  The legislation’s HI savings counted both toward partially offsetting the cost of tax cuts and modestly improving the outlook for the HI Trust Fund.  No one said that was double counting.

That’s also what happened with the 1997 Balanced Budget Act and the 1983 Social Security rescue legislation.  In both cases, the legislation simultaneously reduced deficits and improved Social Security or Medicare financing.  No one called that double counting, either.

It would be double counting to say that the overall budget outlook was improved by the deficit reduction achieved by health reform plus the improvement in the HI Trust Fund’s outlook (just like it would be double counting to suggest the Nationals should add Dunn’s two homers on top of their seven runs and claim they won by a 9-2 score).  But nobody is claiming that (any more than the Nationals are claiming they won 9-2).

Only now, after Congress has passed controversial legislation with no votes from the minority party, are critics raising this specious charge.

Nonsense.

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More About James Horney

James Horney

Jim Horney is the Vice President for Federal Fiscal Policy at the Center on Budget and Policy Priorities, where he specializes in federal budget issues.

Full bio | Blog Archive | Research archive at CBPP.org

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