Associated Press Explains Its Thinking–Somewhat

July 16, 2009 12:08 p.m.

In response to an inquiry from TPMDC, Associated Press spokesman Paul Colford sends over the following statement, explaining why they’re reporting that House health care legislation will cost $1.5 trillion.

The Congressional Budget Office score of $1.04 trillion that the Democrats cite is the figure for the new health insurance “exchange.”

However, that is a net figure, including about $237 billion in revenue raised from employer and individual mandates — fees paid by those who don’t provide or purchase care. Therefore, if you look at costs, the score on that is about $1.27 trillion.

There is also a separate piece of the bill covering Medicare. It includes about $350 billion in new spending (the biggest single piece is for the so-called “doc fix,” which involves the payment rate to doctors under Medicare).

And now the AP is out with an article saying similar things, but in more detail–and, crucially, reiterating the $1.5 trillion price tag. In its new piece, AP concludes that the total projected outlays of the new bill will be $1.65 trillion and that total offsets and revenues will amount to $1.3 trillion. Subtract the two and you get a cost to the federal budget of $350 billion–significantly less than the CBO concluded.

This still leaves a lot of questions unanswered, and I’ve passed them along to AP. First of all, there’s the question of whether it’s standard practice for the AP to use CBO’s bottom line when reporting the cost of legislation, or whether it’s normal practice for the AP to disaggregate legislation and report that it costs as much as the bill’s total outlays, regardless of offsets and revenues.

Second, and more crucially, did the $1.5 trillion figure come from this sort of analysis, or did it come from the claims of an anonymous Democratic aide? After all, if the AP’s using outlays as their metric, then they wouldn’t use the $1.5 trillion figure. They’d use $1.65 trillion.

On the merits, we’re running the AP’s numbers and by budget experts to see if they stack up correctly. The CBO analyzes legislation’s impact on the federal budget, and it’s fairly standard practice for journalists to characterize the CBO’s conclusions as the bill’s “cost.” But the first AP report came out shortly after the CBO released its analysis, and attributed the $1.5 trillion figure to an anonymous Democratic aide–and that seems like the key issue here.

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