Reflex: August 25, 2011

CFRFB writes that the CBO’s August budgetary update (based on current law) is likely too optimistic. The current law projection assumes, among other things, that the tax code will revert back to the marginal rates in place prior to 2001 on January 1, 2013. Don’s comment: The scary thing about the alternative fiscal scenario estimated by CBO, which is similar to CFRFB’s “realistic baseline” is how politically plausible are the assumptions behind these alternative budgetary projections.

Peter Orszag writes that Medicare spending growth was lower than that of private insurers over past year. “Medicare’s growth slowdown has been much greater than that of private health insurance, however, as Maggie Mahar has noted on the Century Foundation’s Health Beat blog. In the 12-month period that ended in June 2011, Standard & Poor’s index for commercial health insurance rose 7.5 percent, while its Medicare index rose only 2.5 percent.” Austin’s comment: There seems to be a lot more evidence that the growth rate of Medicare spending is below that of private insurers than the contrary. In fact, I’ve yet to see any data that illustrate that private insurers, on average, control costs better, though I believe that select insurers in some markets can. Having said that, I’ve looked at the S&P data and I am not sure what it shows since it clearly excludes drug spending (no jump in 2006).

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