Posts Tagged ‘estimated’

Democrat’s Government Health Care Will Increase, NOT Decrease, Costs

July 19, 2009

We don’t have any idea how expensive Obama care will truly be.  You can bet your britches – and you may end up actually being forced to BET your britches – that it will cost a whopping load more than advertised.

First, some figures to show the invariable tendency of the government to dramatically underestimate the cost of its own programs:

– 2009 (January) CBO estimated that the bailout TARP plan would cost taxpayers $189 billion; instead, several weeks later the estimated cost was raised to $356 billion, and will eventually be much more by end of 2009.

– 1965 CBO estimated that Medicare Pt. A cost would be $9 billion by 1990; instead the cost was $66 billion in 1990.  They were wrong by a mere 633%.  Today the costs have exploded so incredibly that no one’s even bothering to go back now and try to figure out just how terribly wrong the forecasters truly were.

1965 CBO estimated that all (Part A plus Part B) Medicare cost would be $12 billion by 1990; instead the cost was $107 billion in 1990, and today it has a stratospheric total unfunded liability of $61.6 trillion.  Oops.

1987 CBO estimated that subsidy for Medicaid special hospitals would be $100 million by 1992; instead the cost was $11 billion in 1992There’s a nice 10,900% cost markup for you.  Better luck next time.

1988 CBO estimated that Medicaid homecare cost would be $4 billion by 1983; instead the cost was $10 billion in 1983.  But don’t worry; it’s only money.  And being off by a mere 150% is actually quite excellent by the “close enough for government work” mindset.

2003 White House estimate of Iraq War cost would be $60 billion; instead the cost so far has exceeded $600 billion.  Oh, well, if at first you don’t succeed, there’s always Afghanistan to screw up too.

Maybe you’d better sit down for this shocker: The U.S. government controls its costs the way Monty Python’s famous Mr. Creosote controlled his weight:

And like Mr. Creosote, it will be that extra tiny little bit of spending that finally causes the U.S. treasury to explode in a gory death.  Instead of the mint that blows up Mr. Creosote, it will be a dollar bill that blows up the U.S. government.

So when you hear the arguments over how much Obama’s health care “reform” will cost, realize that it isn’t a matter of whether it will cost $1 trillion, or $1.5 trillion, or $3.5 trillion; it’s a matter of whether it will cost one of those numbers times a factor of at least 10 or more.

The $1.5 trillion figure, which is currently being thrown around, is enough of a sticker shocker even without the realization that it will actually end up costing far, far more that even Democrats – fearing losing their seats – are beginning to bail out of it.

Still, the worse the plan looks, the faster Barack Obama wants it passed, before people know what a lemon they bought.  Obama has been claiming that we must immediately pass health care “reform” in order to save money in future years.  He has pounded away with that message again and again.

But that message is a complete lie.

Allow me to introduce Doug Elmendorf, the director of the Congressional Budget Office.  And allow me to cite an article by Rick Moran from Pajama’s Media to describe the truly dire situation we face, and which we are ignoring to our literal peril:

ObamaCare Gets a Red Light from Congressional Budget Office

The Democrats’ plan not only won’t save a dime, it will cost us billions over the next decade. (Also see PJTV: Nationwide Protests Target ObamaCare)

Doug Elmendorf, director of the nonpartisan Congressional Budget Office, was testifying before the Senate Budget Committee yesterday when he dropped a bombshell on the gathering that put a whole new spin on the effort by the Obama administration to reform the health care system.

The exchange with Democrat Kent Conrad was a shocker:

Conrad: Dr. Elmendorf, I am going to really put you on the spot because we are in the middle of this health care debate, but it is critically important that we get this right. Everyone has said, virtually everyone, that bending the cost curve over time is critically important and one of the key goals of this entire effort. From what you have seen from the products of the committees that have reported, do you see a successful effort being mounted to bend the long-term cost curve?

Elmendorf: No, Mr. Chairman. In the legislation that has been reported we do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount. And on the contrary, the legislation significantly expands the federal responsibility for health care costs.

Conrad: So the cost curve in your judgment is being bent, but it is being bent the wrong way. Is that correct?

Elmendorf: The way I would put it is that the curve is being raised, so there is a justifiable focus on growth rates because of course it is the compounding of growth rates faster than the economy that leads to these unsustainable paths. But it is very hard to look out over a very long term and say very accurate things about growth rates. So most health experts that we talk with focus particularly on what is happening over the next 10 or 20 years, still a pretty long time period for projections, but focus on the next 10 or 20 years and look at whether efforts are being made that are bringing costs down or pushing costs up over that period.

As we wrote in our letter to you and Senator Gregg, the creation of a new subsidy for health insurance, which is a critical part of expanding health insurance coverage in our judgment, would by itself increase the federal responsibility for health care that raises federal spending on health care. It raises the amount of activity that is growing at this unsustainable rate and to offset that there has to be very substantial reductions in other parts of the federal commitment to health care, either on the tax revenue side through changes in the tax exclusion or on the spending side through reforms in Medicare and Medicaid.

Elmendorf made additional news yesterday by scaring the hell out of everyone when he released the latest CBO report on the long-term budget outlook that, in technical terms, says that we are in very big trouble:

Under current law, the federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging of the population will cause federal spending to increase rapidly under any plausible scenario for current law. Unless revenues increase just as rapidly, the rise in spending will produce growing budget deficits. Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress economic growth in the United States. Over time, accumulating debt would cause substantial harm to the economy. …

Measured relative to GDP, almost all of the projected growth in federal spending other than interest payments on the debt stems from the three largest entitlement programs — Medicare, Medicaid, and Social Security. For decades, spending on Medicare and Medicaid has been growing faster than the economy. CBO projects that if current laws do not change, federal spending on Medicare and Medicaid combined will grow from roughly 5 percent of GDP today to almost 10 percent by 2035. By 2080, the government would be spending almost as much, as a share of the economy, on just its two major health care programs as it has spent on all of its programs and services in recent years.

This double dose of doom has made absolutely no impact on Capitol Hill. Three House committees seem ready to report out a $1.5 trillion health care reform measure while the Senate Finance Committee appears close to a bipartisan deal on how to fund it — this, despite the fact that the CBO chief has told them there is no way to pay for it.

It is like being in a bad dream where there’s a fire in a room where a dinner party is being held and you’re the only one who notices. Everyone else is still playing cards, eating, or sitting around having witty conversations, all the while the fire laps closer and closer.

But it’s not a nightmare and lawmakers really are ignoring the fire. Elmendorf doesn’t come up with these projections to amuse himself and the wonks at CBO. He has outlined a recipe for catastrophe that will eventually make the United States a second rate economic power, not to mention impoverish the population.

The president and Democrats have been pitching this plan as a cost-saving measure. The president especially has been warning that we have to pass this reform bill quickly in order to get control of the spiraling deficits grimly outlined in Elmendorf’s long-term budget outlook.

But Elmendorf is saying that we can’t get there from here, that the numbers being used by Democrats to close the gap between what the bill will cost and how they plan to pay for it are simply not adding up.

There is another aspect to this reform measure that few are talking about: history. Every single entitlement program ever created by the federal government has cost the taxpayer more than advertised — in some cases, astronomically more.

Medicare is a perfect example. When the program was created in 1965, it cost taxpayers around $3 billion. At that time, the House Ways and Means Committee estimated that Medicare would cost $12 billion by 1990 — and that number was adjusted for a predicted rate of inflation. The actual cost of the program in 1990 was $107 billion. And today, Medicare costs the U.S. taxpayer $440 billion.

At best, Congress is guessing. The fact is, no one knows how much this monstrosity is going to cost, no one knows how it is going to be paid for, and no one knows what effect it will have on the quality of care or on the private insurance industry.

The ideas being implemented are untried. And, unlike NASA testing a new rocket or the Air Force testing a new fighter where failure is expected, there is no room for error. However this thing works itself out, we are stuck with it. History is a telling guide here as well; there has never been an entitlement once created that was later rescinded.

Elmendorf’s testimony and budget outlook should be heeded. Yes, we need to reform the health care system — badly. But the Democrats’ plan is not the only game in town. There are many proposals left unexamined by the Democrats in their haste to give their president a triumph. The partisan nature of the debate, the deliberate closing off of alternatives that would cost far less and perhaps do as much as is being proposed, and the damnable rush to get it all done before anything is digested or weighed against the long term, is frightening.

The major justification for speed in passing this legislation just went out the window with Director Elmendorf’s admission that the health care reform bill will only add many billions to the record deficits we will already be running over the next decade. Is that reason enough to slow down or even stop what the Congress is doing in order to think this thing through and try to come up with alternatives?

Not when it’s easier to ignore the fire lapping at your toes in order to grant a political victory to a president in trouble with the voters.

They say elections have consequences, and since the country voted for total Democrat control, we should let the Democrats have their shot.  That may be true.  But what we did as a nation in November was vote to slash our jugular veins, so that the blood of the entire nation (measured in the red ink of crippling debts) would gush out until we are left with less than a banana republic.

It is my sincerely held belief that those who truly understand the real picture are not telling us how truly bad things are, lest the people bring the nation down in one massively giant “bank run.”

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