Free Markets, Free People

costs

ObamaCare–estimates of cost off by $50 billion a year

Even before this particular find, costs for the implementation of ObamaCare were shown to be higher than doing nothing.  Now we learn that in addition to that, there’s an additional $50 billion a year cost that will come due:

Federal payments required by President Barack Obama’s health care law are being understated by as much as $50 billion per year because official budget forecasts ignore the cost of insuring many employees’ spouses and children, according to a new analysis. The result could cost the U.S. Treasury hundreds of billions of dollars during the first ten years of the new health care law’s implementation.

“The Congressional Budget Office has never done a cost-estimate of this [because] they were expressly told to do their modeling on single [person] coverage,” said Richard Burkhauser in a telephone interview Monday. Burkhauser is an economist who teaches in Cornell University’s department of policy analysis and management. On Monday the National Bureau of Economic Research published a working paper on the subject that Burkhauser co-authored with colleagues from Cornell and Indiana University.

Employees and employers can use the rules to their own advantage, he said.  “A very large number of workers” will be able to apply for federal subsidies, “dramatically increasing the cost” of the law, he said.

I’m sure that will come as an “unexpected” surprise to those who preached the entire point of implementing ObamaCare was to “bend the cost curve down”.  Now it appears it will not only fail to do that, but instead bend that curve upward.

Bottom line:

In May a congressional committee set the accounting rules that determine who will qualify for federal health care subsidies under the 2010 Patient Protection and Affordable Care Act. When the committee handed down the rules to the Congressional Budget Office, its formula excluded the health care costs of millions of workers’ spouses and children. The result was a final estimate for 2010 that hides those costs.

“This is a very important paper,” Heritage Foundation health care expert Paul Winfree told TheDC. These hidden costs, he said, “will almost certainly add to the deficit, contrary to what the Congressional Budget Office and others have estimated.”

Your incompetent and clueless government at work.

And we wonder why we have such an outrageous deficit and debt problem?

~McQ

Twitter: @McQandO

More real ObamaCare costs emerge

I don’t want this one to slip by, because it is significant. It is yet another study that shows the numbers attributed to the cost of ObamaCare were so much nonsense. The interesting thing is it comes from an organization friendly to ObamaCare (via HotAir):

Families USA commissioned The Lewin Group to use its economic models to estimate how many individuals would benefit from the new premium tax credits in 2014 and the value of the dollars going to help pay for insurance (see the Methodology on page 12 for more details). We found that an estimated 28.6 million Americans will be eligible for the tax credits in 2014, and that the total value of the tax credits that year will be $110.1 billion.

Where’s the disconnect? Well the Congressional/CBO estimate for this particular cost was almost 600% lower than the Lewin Group study. Ed Morrissey lays it out:

In his presentation to Congress, CBO director Douglas Elmendorf predicted a cost of only $20 billion on health-exchange subsidies and associated costs.  The Lewin Group, which conducted the study for Families USA, shows that four times as many people will become eligible for subsidies in 2014 than the CBO predicted in March and that the cost will be 550% higher as a result (page 4 of the linked study).

How did the CBO arrive at those numbers with which to calculate the cost of ObamaCare?  Well when Morgen at Verum Serum pointed out the discrepancy to Families USA, they had a peculiar answer:

Morgen also contacted Families USA to get an explanation of the difference, and was told that he made an “apples to oranges” comparison.  Why?  This survey, they explained, showed how many people would be eligible, while the CBO predicted how many people would actually take advantage of their eligibility for tax credits.  This is an odd distinction to make, since the entire idea of the subsidies is to encourage uninsured Americans to buy health insurance through both mandates and generous subsidies.

Morrissey asks:

How likely will it be that people will pass on the notion of getting big tax credits to subsidize must-issue health insurance?  And if the success rate in applying mandates, higher taxes, and more government authority to the 270 million Americans who are already insured is only 20-25% in getting the other 30 million insured, how is that at all successful?

The deficit projection given by Democrats was apparently based on 75% failure rates to get people into the system; their advocates are busy touting the massive amounts of subsidies in the program that will tip ObamaCare into a deficit exploder in Year 2.

75% failure rates?  In other words, 75% of those eligible for a generous subsidy through tax credits won’t take advantage of them? 

Really?  I guess this is one of those “benefits” Bill Clinton was talking about that hasn’t quite made an impression yet – exploding costs well above the nonsense the Democrats used to “justify” the abysmal ObamaCare bill.

Talk about being sold a pig in a poke.

~McQ

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Who loves ya, small business?

Well despite all their talk, it isn’t the Democrats. Speaking of the "party of no"Yesterday they killed an amendment offered by Sen. Mike Johanns (R-Neb.) that would have dropped the requirement for increased 1099s issued by business thereby saying "no" to saving huge compliance costs for small businesses.

Johanns said Section 9006 of the ObamaCare bill, requires a "2,000 percent increase" in mandatory filings of 1099 tax forms for businesses, charities, state and local governments, and even churches.

That means that in 2012:

…all organizations will be mandated to issue 1099 tax forms not only to contracted workers, but to any other group or business from which they purchase at least $600 worth of goods or services in a given year. They’ll also be required to send a copy of each 1099 document to the IRS. Johanns called the entire process "punishing" to businesses and cited a July report from the IRS’ independent taxpayer watchdog arm warning that Section 9006 "may impose significant burdens" that it labeled "disproportionate" and perhaps unenforceable.

Also killed was a proposal by Sen. Bill Nelson (D-Fla.), which would have raised the minimum annual threshold for 1099 requirements from $600 to $5000, and would have exempted businesses with 24 or fewer employees. 

Now, just sit back and imagine the compliance cost this will require.  If you ever wanted an example of why businesses have no confidence in government, this should help you with that understanding.  This is as much an unfunded mandate as any.  And it will have businesses wondering if they want to spend the money if they have to report just about everything they do via 1099. 

As usual, a duplicitous White House is involved as Guy Benson reports:

Johanns was especially critical of the White House’s role in torpedoing his amendment. Yesterday afternoon, he told Townhall.com that the president’s stated support for repealing Section 9006 was a bluff. "The White House is panicking. They know it’s a disaster, and they wanted to send a signal that they’d cede ground knowing full well my amendment and [Nelson’s] wouldn’t pass," he said.

So as you sit in your office at 9pm filling out 1099s or paying someone else overtime to do it, remember who brought you the onerous and costly task.  Then do what you must.

~McQ

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