The just released CBO scoring for the Senate bill and reconciliation package comes in at $940 billion over ten years.
A reminder: the benefits (i.e. spending) don’t begin until 2014. The taxation (revenue collection) begins immediately.
A true number? The CBO says the cost over the first 4 years would be $17 billion. The last 6 would equal $923 billion. So isn’t this a better representation of true cost?
$923/6*10 = $1,538 trillion or over 1.5 trillion dollars if the spending is factored evenly over the 10 years like it will be the following 10 years.
And that doesn’t include the $200 billion yearly “doc fix” which was deliberately taken out of the bill to make it seem like less spending. Add that to their claimed “net” and see what it gets you. It’s certainly not $794 over 10 years or any deficit reduction.
Note also the chart in the CBO report how the “net cost” is accomplished:
Taxes and penalties. Penalties on individuals and employers. Taxes on “Cadillac” plans. Question – what happens when those all dry up as revenue streams? The scoring assumes a constant stream. I think we all know better than that. Of course the answer is they must find new revenue streams, i.e. new taxes (or “penalties” as they’re sure to deem them). Additionally full into the spending curve of the plan, we’re looking at around 200 billion a year. Over 10 years that 2 trillion dollars.
Again, remember – the CBO’s scoring assumes absolutely no changes in the bill, revenue streams or projected spending over those 10 years. That’s absolute nonsense on a saltine cracker and we all know that. There is no way those revenue streams remain constant, there’s no way the spending on health care – if this is enacted – won’t be increased as the bill is built upon and despite the CBO’s guess for the following 10 years in which it says it will continue to “save” money, there’s very little to support that premise. In fact, the most telling line in the whole CBO report is this one:
Our analysis indicates that H.R. 3590, as passed by the Senate, would reduce federal budget deficits over the ensuing decade relative to those projected under current law—with a total effect during that decade that is in a broad range between one-quarter percent and one-half percent of gross domestic product (GDP).3 The imprecision of that calculation reflects the even greater degree of uncertainty that attends to it, compared with CBO’s 10-year budget estimates.
You can believe all this nonsense if you wish, but even the CBO isn’t real keen on its own calculations. And by the way, this post isn’t a swipe at the CBO – they score what they get and do it according to the statute under which they operate. But that doesn’t render the GIGO rule invalid.
In the meantime, the House has just passed the “Slaughter Resolution” which would allow it to “deem and pass” this monstrosity. All 222 who voted yes were Democrats. That means Democrats badly want cover on this thing and if they can get it, they’ll let it pass. The House is scheduled to meet at 1pm on Sunday to do so.
If they pass it through “deem and pass”, we’ll essentially have become a Banana Republic.
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If Democrats want to have a vote on the bill this week, after a promised 72 hours availability on-line before the final vote, they have until tomorrow afternoon if they plan on voting Saturday. But Congressional Quarterly is reporting:
House Democratic leaders are still struggling to produce a final health care overhaul bill at an acceptable official cost estimate, but Majority Leader Steny H. Hoyer said Tuesday they continue to plan a final vote this week. House leaders were to huddle late Tuesday afternoon, following a noon session of the full Democratic Caucus. There were reports they are having trouble drafting a bill that meets their budgetary targets….
Rank-and-file Democrats did not talk about the details, but said that the CBO scores had come up short. “They were less than expected” in terms of deficit reduction, said Rep. Gene Green, D-Texas, who plans to vote for the bill.
In reality it isn’t the Congressional Budget Office that is coming up short, but the cost of the bill they’re proposing as a fix. As the American Spectator reports:
There are several things that Democrats are up against when it comes to the CBO score. The most important is that, based on reconciliation instructions, the “fix” bill must be shown to reduce the deficit by at least $1 billion. The challenge is, that’s after assuming that the Senate bill is law. In other words, the reconciliation bill can’t claim any of the deficit reduction from the Senate bill, but rather it must reduce the deficit relative to the Senate bill. Yet the changes that are being talked about will cost a lot of money. This includes eliminating the “Cornhusker kickback” and offering enhanced Medicaid subsidies to all states, increasing subsidies for the purchase of insurance, eliminating the so-called “donut hole” on Medicare prescription drug benefits, and whatever else they put in the bill. At the same time, delaying until 2018 the enactment of the “Cadillac tax” would be scored as a reduction in revenue, and thus add further to the deficit. They’d have to make up the gap through tax increases as well as try to siphon “savings” away from the student loan bill.
Yes, the rumors about the inclusion of a full takeover of the student loan program by government appear to be true and it has been included in health care reform. Look, if they’re going to trash the Constitution and the legislative process this badly, they may as well go all-in. Their problem is going all-in has apparently cost them much more than they thought it would and thus they still don’t have an acceptable bill.
Most likely they’re going to tinker with this until they get what they want in a score. Again keep in mind that this is reform which collects taxes for 10 years but only spends for 6 (benefits in full don’t kick in until 2014) thereby giving the appearance of bending the cost curve down within the 10 year window the CBO is statutorily limited to look at (and shooting the cost curve up after that). I have every confidence that House Democrats can come up with the same sorts of accounting tricks and nonsense that are in the original bill to get the score they want from CBO. But can they do it this week?
Everyday this is delayed means House Democrats are one day closer to the mid-terms and more and more Democrats are saying “no” to the original bill.
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As I recall, one of the things the left most enjoyed calling George Bush was “liar”. Of course all politicians fall into that category from time to time (some stay in it most of the time), but few are as blatant as this:
In the interview, Obama vigorously defended the legislation, saying he is “not just grudgingly supporting the bill. I am very enthusiastic about what we have achieved.”
“Nowhere has there been a bigger gap between the perceptions of compromise and the realities of compromise than in the health-care bill,” Obama said. “Every single criteria for reform I put forward is in this bill.”
Really? “Every single criteria?” Like the public option? And though he’ll deny it, it was one of his criteria. So was “no mandates”. You may remember the debate with Hillary Clinton where he rejected her call for them. Then there was universal coverage. This bill leaves 18 million uninsured. Wasn’t that, after all, the entire reason for the reform? I’m sure fining or jailing those who don’t get insurance was high on his criteria list as well.
All that to say that this monstrosity isn’t anything like what he touted nor does it meet most of his previous criteria. It’s a 2000 page abomination, and regardless of the shine he or anyone else tries to put on it, it is legislation that is ill formed, poorly thought out (if it is thought out at all), filled with bribes and something we simply can’t afford. The CBO has already halved its estimate of the savings it will bring.
Speaking of the CBO, two things from the Director’s blog:
The estimate includes a projected net cost of $614 billion over 10 years for the proposed expansions in insurance coverage. That net cost itself reflects a gross total of $871 billion in subsidies provided through the exchanges, increased net outlays for Medicaid and the Children’s Health Insurance Program (CHIP), and tax credits for small employers; those costs are partly offset by $149 billion in revenues from the excise tax on high-premium insurance plans and $108 billion in net savings from other sources.
By now anyone but the most blinkered partisan hack should be able to interpret the CBO report properly. It’s a simple formula – 10 years worth of revenue against 6 years worth of spending. In fact, divide 817/6 and take that times 10. What do you get? 1.361 Trillion. That’s the true net cost of this over 10 years. That is what it will cost – plus – from 2020 to 2029. It won’t bend any cost curve down.
And don’t forget, most of the savings are to come from Medicare – 500 billion over 10 years, remember? So, the CBO wonders:
Based on the longer-term extrapolation, CBO expects that inflation-adjusted Medicare spending per beneficiary would increase at an average annual rate of less than 2 percent during the next two decades under the legislation—about half of the roughly 4 percent annual growth rate of the past two decades. It is unclear whether such a reduction in the growth rate could be achieved, and if so, whether it would be accomplished through greater efficiencies in the delivery of health care or would reduce access to care or diminish the quality of care.
The CBO avoids the biggest problem in this “plan” – the political will to do it. And while it gives us a choice of options – “greater efficiencies” or rationing and “diminish[ing] the quality of care”, there are few who’ve objectively observed government operate anything over their lifetime who’d pick “greater efficiencies”. So if those savings are realized – certainly not a given as demonstrated by the lack of political will to make hard decisions on much less controversial items in the past – they’ll most likely be realized by rationing and/or a diminished quality of care.
Or to quote myself and any number of others – I told you so.
So while the country founders economically and real unemployment approaches 18%, Obama and the Democrats are screwing around with something that doesn’t even kick in for 4 years? Is it any wonder that his approval rating has approached all time lows for a new president?
One of the criticisms of the Bush administration is it was “isolated” from the main stream of America. In the case of the Obama administration, it seems disconnected from that main stream. “Tone deaf” doesn’t even begin to describe this crew who seem both unaware and unaffected by the real problems facing Americans – polls be damned. For someone who seemed to have his finger on the popular pulse during the campaign, Obama appears to have completely lost it since. He touts the “financial rescue” as his most significant accomplishment during his first year, claiming the 787 billion stimulus as the vehicle of that accomplishment. But as most know, the majority of that money has yet to be spent and that which as been spent has had little or no effect. As mentioned, unemployment remains at record highs. And credit is still difficult to get, businesses have no incentives and plenty of disincentives (health care reform, cap-and-trade/EPA regulations, etc) to not hire or expand, and economy’s only positive quarter (now revised down twice to 2.2% from 3.5%) came from government spending. That is not a “financial rescue”. That’s a bandaid on a sucking chest wound. Meanwhile his administration is in Copenhagen waving more money we can’t afford around in an effort to buy off third world dictatorships who were in search of the payoff from the pseudo-science of “global warming”.
Then, in the Senate, 100 to 300 million bribes were the order of the day to get Senators who claimed to be “standing on principle” off their lofty perches and back to the money-grubbing reality that is politics in the US today.
This is “hope and change”?
As one friend – who was anything but a George Bush fan – said recently it absolutely makes him “pine” for Bush. And trust me, that means he is less than impressed with the man he voted for presently in the White House.
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So, the CBO today, in surveying the success of the American Recovery and Re-investment Act (ARRA,. or as we call it, “the stimulus”, makes the following claim:
Economic output and employment in the spring and summer of 2009 were lower than CBO had projected at the beginning of the year. But in CBO’s judgment, that outcome reflects greater-than-projected weakness in the underlying economy rather than lower-than-expected effects of the ARRA.
It’s kind of hard to argue with that kind of “judgment”. Your “judgment” may vary, of course.
Not that it matters, because neither you, nor the CBO, have the math to back it up.
Actually, it isn’t that hard. And the Democrats demonstrate how to do it in the House Health Care bill. James C. Capretta explains:
For starters, the gross cost of expanded Medicaid coverage and a new entitlement to subsidies for health insurance is much higher than Democrats are suggesting, according to the cost estimate released yesterday by the Congressional Budget Office (CBO). The Democrats report a lower number by netting out the taxes some individuals pay when they don’t enroll in insurance as well as the tax payments from employers who choose to “pay” rather than “play.” But that accounting confuses tax increases with spending reduction. The gross spending increase from the entitlement expansions in the revised House bill is $1.055 trillion over ten years, not $894 billion.
Remember, this is about what it will cost taxpayers. And netting out those who “pay” doesn’t lessen the cost or necessarily mean the revenue collected will go toward paying for this expanded health care.
In addition, as I noted previously, House Democrats have conveniently decided to take the so-called “doc fix” out of the larger health-care bill and pass it as a standalone measure, at a cost of $250 billion over ten years. The House health-care bill is bursting with other Medicare-related provisions. What could possibly justify separate accounting for the physician fee fix? In fact, there is no justification, other than budgetary smoke and mirrors. House leaders are splitting the costs of their scheme into two bills and pretending that this maneuver somehow brings down the overall cost to taxpayers. It doesn’t. In reality, House Democrats are still planning to spend $250 billion on Medicare physician fees, and that should be made clear in any honest accounting of what’s afoot here.
So a quarter of a trillion dollars in cost is going to be excluded from the pending health care bill and passed separately. This defines the terms “smoke and mirrors” when it comes to the real cost of this “reform”. And you can count on Democrats using every little procedural and legislative trick in the book to make this appear to be something it isn’t from a cost stand point – as demonstrated by this particular exclusion from the larger bill. This is, along with global warming, is one of the biggest con jobs ever foisted upon a people.
Finally, there’s the other spending in the health-care plan. There’s loads of it. Higher Medicaid matching funds to buy off selected governors. A new program aimed at encouraging more physicians to enter primary care. Prevention spending. And apparently just about anything else House Democrats could think of to spend taxpayers’ money on. When it’s all racked up, these programs cost $230 billion over a decade. And that’s not even including the extra spending on Medicare drug coverage, which is obscured in CBO’s accounting by provisions which allow the government to set payment rates for certain products.
The 900 billion that President Obama set as an upper limit that would not add a “dime to the deficit” isn’t even close to being met. The cost curve and the deficit curve, as demonstrated above, will definitely go up. But there’s political cover here because the CBO has scored this bill under the 900 billion “won’t add to the deficit” threshold. Of course the CBO can’t score a separate bill that hasn’t been written yet (“doc fix”) nor can it add it to the bill it just scored. And, of course, the CBO estimate for 10 years assumes the legislation will be enacted precisely as it is written and remain unchanged for those 10 years – and we know that won’t happen as well.
But that won’t stop Obama and the Dems from claiming they’ve met the goal of not adding to the deficit when this monstrosity passes. Just hide and watch.
And they’ll also claim they have the revenue to pay for all of this:
On the tax side, Democrats are planning to saddle those with incomes exceeding $500,000 per year with a new 5.4 percent surtax. That would raise $461 billion over a decade, according to the Joint Tax Committee. But there’s also the penalty tax imposed on individuals who don’t sign up for health insurance. That raises $33 billion There’s also the employer “pay or play” mandate, which brings in $135 billion. And finally, there are the taxes on medical device manufacturers and many others. These provisions raise an additional $100 billion over a decade. All in, therefore, House Democrats want to raise taxes on Americans by $725 billion over the period 2010 to 2019 to partially pay for their health-care scheme.
Again, the assumption is that all of these will remain constant revenue streams. Of course, they won’t. The rich will find a way to avoid the tax eventually as will individuals taxed for not getting insurance. And employers will certainly find a way to avoid the penalty of “pay or play”. Plus, I’d be willing to bet that medical device manufactures and other providers will eventually be exempted from their tax when a outcry is heard from those who benefit from their products that the cost is too high. While these revenue streams won’t dry up, common sense says they will be vastly reduced.
And that leave them with what? It leaves them with little choice but to do what everyone has said they’ll be forced to do:
The Democrats close the remaining gap (excluding the physician fee spending) by cutting Medicare and Medicaid spending by about $550 billion over ten years and starting up a new, budget-busting long-term care program that brings in $72 billion in excess premiums in its early years.
The plan is $550 billion in cuts over 10 years. The reality, because the other revenue streams will begin to dry up, will be much higher.
That reality will eventually mean what as costs spiral upward alarmingly?
And who stands the biggest chance of becoming the victim of that rationing?
Those who use the most health care.
And as a demographic, who are they?
“Death panels” anyone?
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And the Politico presents that little nugget this way:
The public insurance option would typically charge higher premiums than private plans available in the exchange, according to the Congressional Budget Office analysis of the House bill.
That surprising conclusion raises doubts about Democratic promises that a government-run insurance plan would provide a lower-cost alternative to consumers. At the same time, it calls into question Republican charges that the plan amounts to government takeover of health insurance — because only 6 million people would enroll in the plan, according to the CBO.
Nonsense. As has been pointed out any number of times, it depends on how robust the public option is, how it is configured and whether or not it uses public money. If, for instance, it was structured as some would like – Medicare – there’s no question that what the GOP charges would be true. And, this is the House bill before the vote. What I think is may happen is this version of a “public option” may be in there as a place holder to get the bill passed out of the House with the idea that a more robust version will be added during the markup with the Senate version (assuming it gets passed). CBO has most likely scored this particular House version properly for now but don’t believe for a second that ends this.
In this fight, every trick in the book is being used, and if you believe this is the final version of the public option, I have some ocean front property in Kansas in which you may be interested.
This isn’t about a sales job, folks. It’s about a con job.
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Which lies? Well in this case I’m talking about the lie that cap-and-trade will be a green job bonanza and an overall job producer and that it will stimulate the economy. Not so says the CBO:
So, instead of stimulating economic growth, it will slow it and instead of creating net jobs, it will be a job killer. Tell me again how that’s a “good thing” in a recession?
A House-passed bill that targets climate change through a cap-and-trade system of pollution credits would slow the nation’s economic growth slightly over the next few decades and would create “significant” job losses fr-om fossil fuel industries as the country shifts to renewable energy, the head of the Congressional Budget Office told a Senate energy panel Wednesday.
CBO Director Douglas W. Elmendorf emphasized that his estimates contained significant uncertainties and “do not include any benefits from averting climate change,” but his message nevertheless contrasted sharply with those of President Obama and congressional Democratic leaders, who have suggested that a cap on carbon emissions would help revive the U.S. economy.
How much will it slow the economy? Elmendorf’s estimates:
Elmendorf testified before the Senate Energy and Natural Resources Committee that the cap-and-trade provisions of the House bill — in which emitters of greenhouse gases would be able to buy and sell pollution credits — would cut the nation’s gross domestic product by 0.25 to 0.75 percent in 2020 compared with “what it would otherwise have been,” and by 1 to 3.5 percent in 2050.
That in the face of growing skepticism over the science supporting the premise that a) man is causing the climate change problem and b) that man can actually “change” nature’s direction in that regard.
But that doesn’t matter. Reps Waxman and Markey have decided that it is necessary regardless of the science, cost or what you want. They have a planet to save you see and it’s all our fault we’re in the situation we’re in now:
“The harsh reality is that America’s global warming and energy challenges are just too important for us to keep mailing it in by not enacting a comprehensive energy and global warming bill.”
So they plan on passing this tax which will slow growth, increase joblessness and impact most those who can afford it the least. Why would they concern themselves with that when the possibility exists they might be able to save a couple of polar bears.
Congress’s approval ratings effectively reflect their priorities – and as you can tell, constituents have figured out their priorities have nothing to do with the needs of constituents or the nation.
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The Washington Post’s “Capitol Briefing” breathlessly announces:
A health-care reform bill drafted by the Senate Finance Committee would expand health coverage to nearly 30 million Americans who currently lack insurance and would meet President Obama’s goal of reducing the federal budget deficit by 2019, the nonpartisan Congressional Budget Office said Wednesday.
The bill would cost $829 billion over the next decade, but would more than offset that cost by slicing hundreds of billions from government health programs such as Medicare and by imposing a 40 percent excise tax on high-cost insurance policies starting in 2013.
All told, the package would slice $81 billion from projected budget deficits over the next 10 years, the CBO said, and continue to reduce deficits well into the future.
That, of course means:
And the CBO report lends a huge political boost to the Finance Committee’s work: distinguishing it as the only one of five bills drafted by various congressional committees that meets every important test established by President Obama and key Democratic leaders.
— It would cost less than $900 billion over the next decade;
— It would vastly expand coverage; and
— It would keep Obama’s pledge that health reform will not increase budget deficits by “one dime” now or in the future.
Whooo hooo! Happy days are here again!
A couple of things to remember: In 1967, official estimates said Medicare would cost $12 billion in 1990. The actual price was $110 billion. And it and Medicaid now have about 50 trillion in unfunded future obligations. Secondly, the reason it doesn’t add to the deficit is it cuts Medicare and will force businesses to either pay an excise tax or drastically cut benefits for those who have what the elite have determined are “Cadillac” plans. Of course what that means is if you like your plan, you can keep it, but your no longer going to like your plan (because it could cost you up to 40% plus more to maintain that plan).
And then there’s this: I thought the whole stated purpose of this “reform” was to ensure the uninsured were insured. Yet the CBO report says:
By 2019, CBO and JCT estimate, the number of nonelderly people who are uninsured would be reduced by about 29 million, leaving about 25 million nonelderly residents uninsured (about one-third of whom would be unauthorized immigrants).
So 16 million US citizens remain uninsured. But fear not – CBO has figured that into the equation as a revenue raiser:
… penalty payments by uninsured individuals, which would amount to $4 billion;
Not to mention you could be spending a year in jail as well.
And those unfair “Cadillac plans” will add to that revenue stream as well (except, apparently, if it is a union plan):
….penalty payments by employers whose workers received subsidies via the exchanges, which would total $23 billion;
And here’s what to be really careful of when assessing this boondoggle that still leaves people uninsured (but does provide yet another law to put people in jail):
The proposed co-ops had very little effect on the estimates of total enrollment in the exchanges or federal costs because, as they are described in the specifications, they seem unlikely to establish a significant market presence in many areas of the country or to noticeably affect federal subsidy payments. As a result, CBO estimates that of the $6 billion in federal funds that would be made available, about $3 billion would be spent over the 2010–2019 period.
As the CBO once said on its initial scoring, this bill would have to run, unchanged, for 10 years for it to unfold, cost wise, as they’re saying it will unfold. That means co-ops, not the public option.
If the public option is included, all the savings supposedly found in this bill go out the window and costs skyrocket. And Nancy Pelosi and Harry Reid say that the final bill will have a public option.
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Yes those party poopers at the Congressional Budget Office are at it again. This time they’ve found the Obama claim that “seniors won’t see any of their Medicare benefits cut under the planned health care reforms” to be, well, not true.
The head of the nonpartisan Congressional Budget Office, Douglas Elmendorf, told senators Tuesday that seniors in Medicare’s managed care plans would see reduced benefits under a bill in the Finance Committee.
The bill would cut payments to the Medicare Advantage plans by more than $100 billion over 10 years.
Elmendorf said the changes would reduce the extra benefits that would be made available to beneficiaries.
My guess is Doug Elmendorf will probably not make the White House Christmas list this year.
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There are a number of people dancing in the street because there’s finally a bill in existence that the CBO says will reduce the deficit. Not by much, but that’s really irrelevant – it does the job that meets one of President Obama’s primary goals.
Of course the plan, authored by Sen. Max Baucus, has also come under fire from both the right and left for various aspects each doesn’t like. But that CBO endorsement, well, they’re pretty happy about that.
However, a close examination of that endorsement should warn everyone with an understanding of politicians and Congressional history off of the plan.
Let me explain. While the CBO does indeed say this plan will reduce the deficit, it makes it very clear that such a reduction is contingent upon some very unlikely happenstance.
[T]he Chairman’s proposal would reduce the federal deficit by $16 billion in 2019, CBO and JCT estimate. After that, the added revenues and cost savings are projected to grow more rapidly than the cost of the coverage expansion. Consequently, CBO expects that the proposal, if enacted, would reduce federal budget deficits over the ensuing decade relative to those projected under current law, with a total effect during that decade that is in a broad range around one-half percent of GDP….
Now that which is very, very unlikely:
These projections assume that the proposals are enacted and remain unchanged throughout the next two decades, which is often not the case for major legislation. For example, the sustainable growth rate (SGR) mechanism governing Medicare’s payments to physicians has frequently been modified (either through legislation or administrative action) to avoid reductions in those payments. The projected savings for the Chairman’s proposal reflect the cumulative impact of a number of specifications that would constrain payment rates for providers of Medicare services. The long-term budgetary impact could be quite different if those provisions were ultimately changed or not fully implemented.
The Baucus plan, just like the House plan, derives the majority of its “savings” in cuts in Medicare spending. However, as Peter Suderman at Reason’s Hit & Run explains, the likelyhood of those cuts ever being made, at least to the point necessary to reduce the deficit, is poor at best. Why?
Because of the mechanism the bill uses to make them:
It’s true that the Baucus plan, which creates a commission to figure out how to cut Medicare costs, sets up a slightly more robust framework for cost-cutting than currently exists. But that commission still only gets to make recommendations, and Congress still has the power to block them.
To review – in order to meet the CBO numbers, the bill must be enacted and remain unmodified for two decades. And, Congress must enact the Medicare cuts to the level required of the bill to achieve those reductions.
I ask you – what would you bet on either of those things actually ever coming to pass?
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