The Blahous dust up
April 17, 2012 3 Comments
Jonathan Bernstein with a post decrying the poor job the WaPo Ombudsman did in describing the controversy around the piece put out last week by Charles Blahous that said the ACA will increase the deficit (contro to CBO’s longstanding estimates). I was with my family in a car heading South on I-95 reading about the unfolding controversy on twitter last week, and so I didn’t post on it. However, even now, it is mostly being described as a dust up over double counting (how can something help the deficit and Medicare). Jonathan Chait has a good piece debunking this claim, Kevin Drum has a nice illustration of why this is not a valid claim, and Josh Barro adds a bit more on how this interpretation undermines one of the conservative charges leveled against the President. This is an old argument, rehashed.
The primary issue with the Blahous study is his development of a new baseline against which to compare the ACA. As I tweeted last Tuesday as we sped to vacation wonderland (I wasn’t driving)
(Here are Avik’s posts including Chuck’s guest post response: here and here).
The baseline used by Chuck Blahous essentially says that when tax inflows are no longer large enough to pay for Medicare outlays, then they will be cut to equal tax inflows; this is what is set to happen by law, but then again so are the cuts to Part B payments under the SGR. The baseline he used in this study to estimate the ACA’s impact on the deficit essentially says, Voila! There are no long term financing problem with Medicare after all, we will just fix them when we have to do so, using some sort of secret plan to cut Medicare spending (he seems to have backed off this later, but if so, the ‘stop the presses’ aspect of the paper is gone). As compared to this (very large, hypothetical) cut in Medicare expenditures cooked into the baseline used by Blahous in his study, the ACA would increase the deficit. That is a bit like me saying if I was a faster runner, I could be a professional marathoner. My point is that the main action in this study is comparing the ACA to a baseline that is unrealistic, not double counting.
Now what I would really like to read would be Chuck Blahous’ thoughts on what type of health reform strategies that we should undertake, especially ones that could do away with the long term financing problems faced by the program. I mean that sincerely because he is a great analyst with lots of experience, this just wasn’t his best.
update: edited for clarity.
About Don Taylor
Did you read Cowen’s take on Blahous?
Steve
@steve2
yes (http://marginalrevolution.com/marginalrevolution/2012/04/relative-to-baseline-forecasts-aca-and-otherwise.html) and he has one point I agree with (that baselines can be overrated for evaluating policy because economic realities intervene). However, his assessment that Blahous was not primarily trying to do baseline sleight of hand, but instead trying to take seriously the political economy of how Congress would respond to future shortfalls doesn’t ring true to me. Of course, that means two people read the same paper and came away with different takes….and really only Chuck Blahous knows. In the end, the lack of Blahous’ or other conservatives being clear about what they would do on health reform beyond what they are opposed to makes me conclude the main point of the paper was to produce a headline that ‘Obamacare will reduce deficit after all’ supporting the political line of it should be junked entirely, it is a failure, etc. Particularly telling is his answer on the washington journal show telling the caller there is a commitment by both sides to meet Medicare obligations; that sort of takes away his baseline. Anyway, I meant it when I said I would like to know what Chuck thinks is a reasonable way ahead on health reform.
Thanks Don. I was disappointed by Cowen on this one.
Steve