CBO deals new blow to health plan
By: Chris Frates
July 25, 2009 02:47 PM EST

For the second time this month, congressional budget analysts have dealt a blow to the Democrat's health reform efforts, this time by saying a plan touted by the White House as crucial to paying for the bill would actually save almost no money over 10 years.

A key House chairman and moderate House Democrats on Tuesday agreed to a White House-backed proposal that would give an outside panel the power to make cuts to government-financed health care programs. White House budget director Peter Orszag declared the plan "probably the most important piece that can be added" to the House's health care reform legislation.

But on Saturday, the Congressional Budget Office said the proposal to give an independent panel the power to keep Medicare spending in check would only save about $2 billion over 10 years- a drop in the bucket compared to the bill's $1 trillion price tag.

"In CBO's judgment, the probability is high that no savings would be realized ... but there is also a chance that substantial savings might be realized. Looking beyond the 10-year budget window, CBO expects that this proposal would generate larger but still modest savings on the same probabilistic basis," CBO Director Douglas Elmendorf wrote in a letter to House Majority Leader Steny Hoyer on Saturday.

On his White House blog, Orszag – who served as CBO director in 2007 and 2008 – downplayed the office's small probable savings number in favor of the proposal's more speculative long-term benefits.

"The point of the proposal, however, was never to generate savings over the next decade. ... Instead, the goal is to provide a mechanism for improving quality of care for beneficiaries and reducing costs over the long term," Orszag wrote. "In other words, in the terminology of our belt-and-suspenders approach to a fiscally responsible health reform, the IMAC is a game changer not a scoreable offset."

But scoreable offsets are the immediate savings that fiscally conservative Blue Dogs and other Democratic moderates have been pushing for precisely because they will help offset the bill's cost.

The proposal's meager savings are a blow to Democrats working furiously to bring down costs in order to win support from Blue Dogs, who have threatened to vote against the bill without significant changes. The proposal was heralded as a breakthrough on Tuesday after Blue Dogs and House Energy and Commerce Chairman Henry Waxman emerged from the White House with agreement on giving the independent panel, rather than Congress, the ability to rein in Medicare spending.

Republicans pounced on CBO's analysis as another demonstration that Democratic proposals don't control costs.

"The President said that rising health care costs are an imminent threat to our economy and that any reform must reduce these long-term costs. But CBO has made clear once again that the Democrats' bills in Congress aren't reducing costs and in fact could just make the problem worse," said Senate Republican Leader Mitch McConnell.

Saturday's CBO analysis caps a tough week of blown deadlines, partisan bickering and fierce intra-party fighting among Democrats. On Friday, the tension between the Blue Dogs and Waxman exploded when Waxman threatened to bypass his committee and bring the reform bill straight to the House floor without a vote. The move infuriated Blue Dogs who have used their crucial committee votes to leverage changes to the bill.

But by late Friday, Waxman said their colleagues had pulled the two groups "back from the brink" and back to the negotiating table.

Still, Hoyer said there was little chance that that the House would pass a health reform legislation before Friday when lawmakers are expected to leave Washington for summer recess.

House Republican Leader John Boehner's office said that it's time to hit the legislation's reset button.

"This letter underscores the enormous challenges that Democrats face trying to pay for their massive and costly government takeover of health care. In their rush to pass a bill, Democrats continue to ignore the stark economic reality facing our nation," said Boehner spokeswoman Antonia Ferrier. "Let's scrap the current proposal and come together in a meaningful way to reform health care in America by reducing cost, expanding access and at a price tag we can afford."