Wednesday, September 16, 2009

More on CBO scoring

Article noting that Kent Conrad, chairman of Senate Budget committee, asking CBO to score the emerging Senate Finance Committee bill over a 20 year period instead of the typical 10 year period. This will make it even harder to pass a deficit neutral test....particularly given CBO's conservative scoring of certain features designed to reduce expenditures.

I think most will see this as leading to the notion that reform will have to be pulled back and made more incremental and less sweeping to meet a harder deficit test....but, I think it is the opposite, mostly because of demographic realities. Given unwillingness of CBO to score savings from things like electronic medical records and uncertainty of what the polices of an Independent Medicare Advisory Commission would bring about, about the only way to get to deficit neutral over 20 years is to do something major to Medicare, like begin to slowly raise the age of eligibility and have a substantial cap of the tax exclusion of employer paid insurance premiums. The longer out you look vis-a-vis applying a test of deficit neutrality, the more profound the change has to be.....because the bigger the problem inherent with the status quo becomes. Put another way, the next 10 year period is the last such period in which you could piece together some insurance expansions with various reductions and make things balance out....because when the baby boomers hit Medicare, it is a whole new ballgame.

We really need to slow the rate of spending growth in the system, before this happens.

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