The Guest Blog

Tony Fratto: The Coming Health Spending Blizzard

As senators made their way to Capitol Hill this weekend, a confluence of meteorological conditions conspired to dump nearly two feet of snow on Washington, DC.  Unlike the decisions being made under the Capitol dome, we’ll soon dig ourselves out from the mountains of snow. 

But the mountains of debt from the Health Care Spending Blizzard of 2009 will be with us for decades to come. Mother Nature will lend a helping hand to rid us of snow by eventually delivering sunny days and warming temperatures.  Unfortunately, the nature of political fecklessness in Washington will only make our spending and debt problems worse.

Healthcare coverage and the hastle of forms

Evidence of the weekend snow blizzard is tangible: we see it.  We feel the cold in our bones. We feel its weight as we shovel clear passage for our walkways and cars. 

Evidence of the spending and debt blizzard is hidden, cloaked in misleading rhetoric and fiscal scoring by a Congressional Budget Office forced to suspend even its own disbelief. 

But we can make our own forecasts for the storm that's coming.

Senate Majority Leader Reid's health spending bill has a holiday teaser price tag of $871 billion over ten years.  But even this enormous cost — like so many door-busting Christmas sale items — hides the higher true costs.

In the ways of Washington, everyone knows the costs will be higher -- even President Obama who continues to wag his finger at anyone who questions the plainly obvious fiscal fictions in the bill.

There are more, but here are three specific ways the legislation will break President Obama's mandate that health reform not add "one single dime" to the deficit:

1. Timing Gimmicks. The CBO score that delivered the rhetorical gift of an estimated $132 billion in deficit reduction looks only at the 10-year window of the bill after enactment of the bill -- not after the benefit programs begin. The overwhelming majority of the bill's benefits (spending) won't kick in until 2014 and after. So the 10-year window includes at least three non-spending years. The start-date gimmick merely delays the deficit spending blizzard.

2. Phantom Physician Payment Cuts. Senator Reid -- in an unabashed feat of cynicism -- proposes to cut the reimbursement rate for doctors participating in the Medicare system by 21% in 2010, and then holding that lower rate for the next decade. There is no person alive in Washington who believes this will happen -- not Harry Reid, not President Obama, not the American Medical Association. No one. CBO Director Elmendorf knows it won't happen, but his hands were tied by its inclusion in the bill.

What everyone does know is that Congress will instead move separately to INCREASE reimbursement rates in order to ensure that doctors continue to participate in Medicare programs. The price tag for this "doc fix" alone approaches $300 billion over the next ten years. If included -- as everyone knows it should be -- the scoring blows up. Taking this measure out of the health spending bill is a fiction to make Reid's warped math appear to work.

3. Medicaid Cost-sharing Deals. Medicaid -- the health care system originally intended for poor Americans -- will be expanded to include individuals and higher incomes. Because Medicaid costs are shared by the federal government and states, this expansion will bust the budgets of already strained state budgets. Recognizing this, Nebraska Senator Ben Nelson sold his vote to conclude Senate debate in exchange for a promise that federal taxpayers will pick up -- forever -- the increased costs of this expansion.

All other states will (rightly) seek to match the "full-Nelson" benefit. Like the "doc fix", everyone knows this will happen, and everyone -- again, President Obama and CBO included -- understands it will result in billions of additional spending on the fiscal tab not offset by tax increases in the bill. The so-called Blue Dog Democrats in the House know it, but since this group is now as fictional as the blue-skinned Avatar characters, they'll go along and allow the spending storm to come. Liberals in the House and Senate know it, but an expansion of federally-paid health care, isn't something to avoid, but rather is their chief aim.

In Washington, we may still be digging out from the weekend's winter snow storm, but we'll be digging out from the Senate snow job for decades.

Grab your shovels.

Tony Fratto is a CNBC on-air contributor and most recently served as Deputy Assistant to the President and Deputy Press Secretary for the Bush Administration.