Budget Director Peter Orszag and White House Health Policy Advisor Nany-Ann DeParle (who was a PAD in the Clinton OMB) write in today’s Washington Post:

But some critics complain that the administration has slipped in its commitment to fiscal responsibility in health reform.

These critics are mistaken. The president’s plan represents an important step toward long-term fiscal sustainability: It more than meets the president’s commitments that health-insurance reform not add a dime to the deficit and that it contain measures to reduce the growth rate of health-care costs over time.

I suspect this op-ed is aimed at moderate Democratic House members who are nervous about voting aye.  I am one of the critics Orszag and DeParle mention, and I’d like to respond to one of their arguments.

CBO says the Senate-passed bill would reduce budget deficits over the ten-year period 2010-2019 by $132 B relative to what those deficits would otherwise be under current law.  I want to focus on this comparison, and in particular on the $438 B of savings CBO scored from Medicare and Medicaid in that bill.  I do not question these aspects of CBO scoring, but do disagree with the conclusions drawn from it by others.

$210 B of these $438 B in net Medicare and Medicaid savings come from a single legislative gimmick known as “gaming the budget window.”  To a certain extent the Obama Administration isn’t to blame for this problem, but they are taking advantage of it in this legislation.  This is a fairly complex technical issue, and by no means the only problem a fiscally responsible person should have with this bill.  Still, $210 B and the Administration’s claim of fiscal responsibility rely upon this gimmick, so I’ll do my best to explain it.

Read the full post here