Contemplating Health Care Reform

Saturday, March 20, 2010

So it doesn't actually save money

It appears the CBO scoring of the current health care reform proposal doesn't actually save money:

Medicare fix would push health care into the red

Greg Mankiw gives a rundown of the economic effects of this reform, concluding

Indeed, to be very wonkish about it, these tax changes could have especially large [negative] GDP effects. Some people like to argue that taxes have small GDP effects because income and substitution effects offset each other. But if you give someone a subsidy and then phase it out, both the income and substitution effects work in the direction of reducing work effort.

A Warning about CBO Scoring

Michael Cannon states

If, however, the doc fix is actually part of the Obama plan, and that law would be subject to normal political forces plus the new political dynamics the law would create, then the CBO predicts the Obama plan would increase federal deficits by $59 billion over the next 10 years and maybe one-quarter percent of GDP in the subsequent decade.

CBO: ObamaCare Would Increase Deficits by $59 Billion

As we have been saying, this is a poorly constructed, expensive mistake.

No comments:

Post a Comment