Tuesday, March 23, 2010

Health Care Reform Will Raise, Not Lower, Deficits

"Last Thursday, the Congressional Budget Office reported that health care reform legislation would, over the next 10 years, cost about $950 billion, but because it would raise some revenues and lower some costs, it would also lower federal deficits by $138 billion. In other words, a bill that would set up two new entitlement spending programs — health insurance subsidies and long-term health care benefits — would actually improve the nation’s bottom line.

Could this really be true? How can the budget office give a green light to a bill that commits the federal government to spending nearly $1 trillion more over the next 10 years?

The answer, unfortunately, is that the budget office is required to take written legislation at face value and not second-guess the plausibility of what it is handed. So fantasy in, fantasy out.

In reality, if you strip out all the gimmicks and budgetary games and rework the calculus, a wholly different picture emerges: The health care reform legislation would raise, not lower, federal deficits, by $562 billion."

~Former CBO Director Douglas Holz-Eakins (and currently president of the American Action Forum),
writing in the NY Times

28 Comments:

At 3/23/2010 9:20 AM, Blogger Methinks said...

Hey, hey! Don't forget the incentive effect of raising taxes on the evil rich by 10 percentage points and the effect of that on GDP!

But, at least all those unemployed people can't be denied an entitlement to waiting 2 years on a wait list to see their primary care physician about that lump they found. Whew. Thank God for government, papa Obama and mama Pelosi.

 
At 3/23/2010 9:22 AM, Blogger Hey-nonny Bosh said...

Say it ain't so!

What really--as in "actually"--frightens me is the large number of folks that think otherwise.

It's like we live in two different worlds...

 
At 3/23/2010 9:28 AM, Anonymous Anonymous said...

We should subsidize health care the way we subsidize real estate, we'd be drowning in health care providers. Deduct cost of health insurance. Give special capital gains treatments to investment in hospitals, clinics, docotrs, etc. Give same subsidies to medical schools as law schools.

We need to learn from the real estate market.

 
At 3/23/2010 10:19 AM, Blogger juandos said...

"We need to learn from the real estate market"...

Hmmm, still the Democrats and Obama want to treat the medical sector as Fannie Mae & Freddie Mac instead...

 
At 3/23/2010 10:37 AM, Blogger QT said...

Anon,

You make a good point about health care premiums being deductible. Why should premiums be deductible for businesses but not for individuals? Tying coverage to employment has created a great many problems for workers. (ie. coverage mobility or getting sick and losing coverage) The U.S. should evolve from the present system that was the result of WWII wage and price controls.

Regarding incentives for investment, that might be a more attractive idea because it implies less active government control of the health care industry. Is there not the danger of creating a bubble of too much capital chasing too little returns particularly in a field such as drug development which implies massive R&D with only a few blockbuster drugs creating a ROI?

Real estate presents a mixed picture regarding the merits of government stickhandling of incentives.

 
At 3/23/2010 12:06 PM, Anonymous Lyle said...

Note that further if your employeers provides the facility even the employee part of health insurance can be tax protected thru something called a benefit cost reduction program. So it costs less for an employee even if there is a contribution.
Move instead to saying that total medical costs (premiums paid by whomever), deductibles, prescriptions etc are deductable to the extent that they exceed say 7.5 % of income.

 
At 3/23/2010 12:36 PM, Blogger QT said...

Lyle,

Good idea. Wish you were in Washington helping to make sausage.

The quality of the charcuterie is sadly wanting.

 
At 3/23/2010 12:41 PM, Blogger sethstorm said...


But, at least all those unemployed people can't be denied an entitlement to waiting 2 years on a wait list to see their primary care physician about that lump they found.

That's because there were people who closed up shop(or moved it to some Third World country) out of spite. The blame will be on them for doing so. Same thing goes for politically induced adverse actions against employment.

 
At 3/23/2010 1:13 PM, Blogger Hey-nonny Bosh said...

I like the real estate comments. Any analogies to retirement plans? Specifically, think of Taft-Hartley plans (i.e., retirement plans for unions), which are divorced from a specific employer (given that, say, construction laborers job-hop constantly), although employers must pay into the fund.

Any synergies there? If government wanted to subsidize health plans, would a Taft-Hartley type arrangement offer benefits? (substitute "insurance plan" for "fund" below):

Important provisions for multi-employer funds included in the Taft-Hartley Act and ERISA are:

* The fund must function for the sole and exclusive benefit of the participants.
* The fund must have a Trust Agreement/Plan Document which states the basis for employer contributions paid to the fund.
* The trustees have a fiduciary responsibility to operate the fund in a prudent manner, to benefit the fund’s participants.
* The employer contributions paid to the fund must be used for paying specified benefits.
* The fund must provide each participant with a comprehensive Summary Plan Description (SPD).

 
At 3/23/2010 2:02 PM, Anonymous Anonymous said...

That being said, make it a requirement that this government insurance plan must be funded and meet its costs through premiums just like a private plan. Also, it would not go into effect until 10 million persons have signed up for the government plan....

 
At 3/23/2010 3:02 PM, Anonymous Benny The Man said...

Oh, it's the end of the world.
Why is the DJI rallying? Those morons!
No TV on Wall Street?

 
At 3/23/2010 3:43 PM, Blogger sethstorm said...


Oh, it's the end of the world.
Why is the DJI rallying? Those morons!
No TV on Wall Street?

The way Wall Street is operating, it doesn't seem to care that much about what is going on. It's more disconnected from reality than Washington DC is.

 
At 3/23/2010 3:54 PM, Blogger Paul said...

"Why is the DJI rallying? Those morons!"

The bond market has other ideas about the bankrupt policies of the nitwit you voted for.

 
At 3/23/2010 5:35 PM, Blogger PeakTrader said...

The stock market is rising, because it dislikes uncertainty more than negative news and discounts the future. So, it's rising for reasons most people don't know, because it's the information you don't know that's most important :}

 
At 3/23/2010 5:55 PM, Anonymous Benny The Man said...

Paul-

Indeed, we need to pare down debt spending, and pay off existing debt by using Milton Friedman's favorite tax: the progressive consumption tax.

Gradual phase-out of the homeowners mortgage interest tax deduction would do well by our economy too.

I join with other true conservatives in the battle against federal waste--wherever it is found, from rural dell to urban hell.

And Paul--don't be a harsh fellow, be a marshmellow!

 
At 3/23/2010 6:20 PM, Blogger Paul said...

Benji,

No true conservative would have voted for your boyfriend Barack.

 
At 3/23/2010 6:57 PM, Anonymous Benny The Man said...

There wasn't much of a choice.
And the last President to propose a balanced budget was Clinton. No R-Party president has even proposed a balanced budget since Eisenhower.

Do you think 50 years of waiting for an R-Party President to propose a balanced budget is long enough to decicde that day will never come?

I don't have another 50 years to wait.

 
At 3/23/2010 7:26 PM, Anonymous Anonymous said...

This bill is almost identical to the plan written by AHIP, the insurance company trade association, in 2009. The original Senate Finance Committee bill was authored by a former Wellpoint vice president. Since Congress released the first of its health care bills on October 30, 2009, health care stocks have risen 28.35%.

Fact Sheet: The Truth About the Health Care Bill, Jane Hamsher, The Huffington Post

Insurance companies are now heavily regulated government contractors. Way to get big business out of Washington! They will clear a small, government-approved profit on top of their government-approved fees. Then, when healthcare costs rise — and they will — Democrats will insist, yet again, that the profit motive is to blame and out from this Obamacare Trojan horse will pour another army of liberals demanding a more honest version of single-payer. The Obama administration has turned the insurance industry into the Blackwater of socialized medicine.

The reality of Obamacare, Jonah Goldberg, L.A. Times

This is corporatism, or as Mussolini called it - fascism.

 
At 3/23/2010 7:29 PM, Anonymous Anonymous said...

No R-Party president has even proposed a balanced budget since Eisenhower.

As usual, you have no idea what you're talking about. Clinton did not propose balanced budgets. He always wanted to spend more than the Republican Congress would allow. It was the Republicans, led by Newt Gingrich, that balanced the budget. Take a civics class, all spending bills must originate in the House of Representatives.

 
At 3/23/2010 7:59 PM, Anonymous Benny The Man said...

Anon-
In fact, the Executive Branch propsoes a budget, adn it becomes the base document, marked up by Congress.

From Wikipedia:

"Congressional consideration of the federal budget begins once the President of the United States submits a budget request, which is formulated over a period of months with the assistance of the Office of Management and Budget, the largest office within the Executive Office of the President. The budget request includes funding requests for all federal executive departments and independent agencies."

No R-Party President has submitted a balanced budget since Eisenhower. Clinton, in fact, submitted surplus budgets.

 
At 3/23/2010 8:37 PM, Blogger moneybagzz said...

CLinton's surpluses were ephemeral in light of Washington's appetite; they were operational in nature, not structural.
A structural surplus (persistent revenues over expenditures) would be needed for the next 30 years to pay for the benefits promised (but unfunded) to the Boomers and beyond.

And given the unrelenting greed exhibited by Congress, structural surpluses are a fantasy.

Longing for Bush....

 
At 3/23/2010 10:02 PM, Blogger juandos said...

Well I see that pseudo benny is still playing with his fantasy toy box: "From Wikipedia blah, blah, blah...

No R-Party President has submitted a balanced budget since Eisenhower. Clinton, in fact, submitted surplus budgets
"...

ROFLMAO!

Is the sky blue on a sunny day on your planet pseudo benny?

the Clinton Budget Surplus; Fact or Fiction?

 
At 3/24/2010 7:10 AM, Blogger Paul said...

"No R-Party President has submitted a balanced budget since Eisenhower. Clinton, in fact, submitted surplus budgets."

Clinton happened to be in office during the great tech/Y2K bubble of the late '90's. He got out just as the roof caved in. And how many times did he attack the "extremist" budget slashing Gingrich Congress? That's what the '95 government shutdown was all about.

Anyway, all that's irrelevant to the fact you, Mr True Conservative, voted for an obvious socialist who doesn't appear to have any friends who aren't communists and/or criminals. McCain, who wasn't my favorite by any stretch, was like night and day in comparison.

But you were apparently getting your news analysis from People Magazine.

 
At 3/24/2010 8:19 AM, Blogger juandos said...

From Americans for Tax Reform we have the following: BREAKING: Comprehensive List of
Net Tax Hikes in Health Reconciliation Bill


The U.S. Senate today will begin consideration of H.R. 4872, the “Reconciliation Act of 2010.” It makes several changes to the healthcare law signed by President Obama today...

Bottom line: TOTAL Net Tax Hike Effect: $52.3 billion/10 years

 
At 3/24/2010 11:48 AM, Anonymous Anonymous said...

Methinks:

Are you in a bracket to be incentivized by that 10% increase, or is it that you shed more tears for the rich than the sick?

 
At 3/24/2010 11:50 AM, Anonymous Anonymous said...

"Tying coverage to employment has created a great many problems for workers. (ie. coverage mobility or getting sick and losing coverage) The U.S. should evolve from the present system that was the result of WWII wage and price controls. "

Bingo.

QT hit it on the head.

 
At 3/24/2010 9:48 PM, Blogger juandos said...

Interestingly enough, the lovely Ms. Amity Shales has something to say about those CBO numbers: We've got those lied-to-about-health-care-costs blues

(skip)

The CBO's rules make it hard for the group to fulfill its own mandate. You'd think, for example, that the CBO would use its own parameters when it crunches numbers. Instead, the CBO must use the same mathematical assumptions supplied by the very lawmakers who wrote the bill the group is evaluating. No matter how improbable those formulas are...

 
At 3/25/2010 6:02 PM, Anonymous Steve said...

I am really hoping that the Replicans offer another 30 amendments tonight and the bill gets delayed until after their spring break.

 

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