Donald Marron is correct. Donald Marron:
What is Health Care Reform?: The policy community and commentariat often equate health care reform with the legislation (actually two pieces of legislation) that President Obama signed into law last year. As everyone knows, the Congressional Budget Office estimated that those two laws would, if fully implemented, reduce the federal budget deficit by $143 billion from 2010-2019. That’s the basis for the claim that “health care reform would reduce the deficit over the next ten years.” (CBO also discussed what would happen in later years, where the law, if allowed to execute fully, would have a bigger effect, but let’s leave that to the side right now.) The complication... is that the health care reform legislation included many provisions. Greg [Mankiw] notes, for example, that some expanded health insurance, while others raised taxes. In his view, only the first part constitutes health care reform....
In fact, it’s more complicated than that. By my count, the two pieces of health care reform legislation combined seven different sets of provisions:
- Expanding health insurance coverage (e.g., by creating exchanges and subsidies and expanding Medicaid)
- Expanding federal payments for and provision of health care services (e.g., reducing the “doughnut hole” in the Medicare drug benefit)
- Cuts to federal payments for and provision of health care services (e.g., cuts to Medicare Advantage and some Medicare payment rates)
- Tax increases related to insurance coverage (e.g., the excise tax on “Cadillac” health plans)
- Tax increases not related to insurance coverage (e.g., the new tax on investment income)
- The CLASS Act, which created an insurance program for long-term care
- Reform of federal subsidies for student loans....
Greg’s point, I think, is that... [t]o say “the health care reform law reduces the deficit over the next ten years according to CBO” is absolutely true. But it often gets elided to “health care reform reduces the deficit over the next ten years” which isn’t true if, like Greg, you think the revenue raisers, student loan changes, and CLASS Act aren’t really health care reform.....
Greg’s analogy has a flaw: it presumes that none of the tax increases count as health reform. I disagree. Our current tax system provides enormous ($200 billion per year) subsidies for employer-provided health insurance. They should be viewed as part of the government’s existing intervention in the health marketplace. And rolling back those subsidies strikes me as essential to future health care reform.... [The] tax on “Cadillac” health plans... will clearly affect health insurance markets, and it offset a portion of existing tax subsidies... [is] as part of health care reform.
The key thing is not the difference between spending and revenues, but between provisions that fundamentally change the health care system and those that do not...
By my count, more than half of the tax increases in the Affordable Care Act over the next two decades are provisions that fundamentally affect the health care system--and the share of tax increases that are clearly health related grows over time,