The latest Ponzi scheme from Ryan and congress


The gimmick under consideration would have the Congressional Budget Office (CBO) raise the budgetary baseline so Congress can lower the baseline and spend the artificial “savings.” It’s a Ponzi scheme of the first order, the kind of thing Bernie Madoff would have been proud of. Here’s how it would work.

Congress would direct CBO to assume that Obamacare’s cost-sharing reductions (CSRs) would not be paid. While the Trump administration did cut those subsidies off last October, due to the lack of a constitutional appropriation for them, the budget scorekeeping conventions (discussed in detail below) indicate that CBO should still assume the subsidies would continue. However, Congress would instruct CBO to override that precedent.

CBO would then increase the spending baseline for Obamacare, because of the interactions between CSRs and the law’s insurance premium subsidies. Essentially, eliminating the former would cause spending on the latter to rise, as insurers raise premiums to reflect the lack of CSR payments. (Under the law, insurers must reduce cost-sharing for low-income individuals regardless, so they would adjust premiums upward—as they did in most states for 2018—to reflect the cost of this regulatory mandate.) Higher premiums will lead to higher federal subsidies for those premiums, at $194 billion over a decade, according to an estimate CBO released last August.

After instructing CBO to assume that CSR funds would not be appropriated, Congress would then turn around and appropriate those funds, for a defined period of perhaps two years. Having permanently increased the spending baseline in step two above, CBO would then score a bill temporarily appropriating cost-sharing reductions as saving money for that defined period, because spending on CSRs would lower spending on premium subsidies—the opposite of the effect described above.

Congress would then take the “savings” from appropriating funds for CSRs—which, as explained above, consists not of legitimate deficit reduction so much as a phony gimmick derived from playing budgetary games—and spend that money on reinsurance and other corporate welfare payments to health insurers.