Obamacare's Good News Only Tells Half the Story

From Megan McArdle.

"Basically, the new CBO analysis addresses the first portion but not the second. The insurance coverage provisions, it thinks, will actually cost almost $150 billion less than expected, thanks to a number of changes: slower overall growth in health-care costs; the decision by insurers to offer cheaper "narrow network" exchange plans with a reduced selection of doctors and facilities; and revisions to assumptions about everything from how many people were on Medicaid before the law took effect to how many people will lose their employer-sponsored insurance thanks to the law.

On the revenue side, however, it is mostly silent. And we've seen some slippage on the revenue side: For example, the Barack Obama administration has so far been reluctant to implement the required cuts to the Medicare Advantage program, which were a major revenue source under the original law.

Does that mean Obamacare isn't generating more deficit reduction than predicted? No. The lower insurance costs are great news for the federal budget. But you can't get that out of this analysis -- or any other analysis, I fear, because the CBO has stopped scoring the law as a whole. We should be glad to learn that the CBO thinks we'll be spending less on subsidies. But we shouldn't put more weight on that statistic than it can actually bear."