Obama Care Numbers Continue To Not Add Up

Let's review. With the passage of President Obama's precious health care reform legalisation, we were supposed to see a budget deficit reduction of about $143 billion in the first ten years of the enactment. At the time of passage, this blog and many other sources pointed out that this was a somewhat bogus number since the bill called for revenue collection to support the legislation to begin soon but the payment of benefits to be delayed so that the first ten years of numbers had about six years worth of heavy costs but ten full years of revenue. Sort of like an apples to oranges comparison. When you can front load the revenue and delay the costs, any government program looks better than it really is in the short term.


By fudging the timing of the numbers, the proponents of the legislation were able to claim that the bill would reduce the federal deficit by about $143 billion over ten years or about $14 billion a year. As readers to this blog know, the Obama administration will overspent its revenue by about $1.4 TRILLION this year alone. While we are thankful for the savings of $14 billion a year, this is about 1% of the Obama overspending in both 2009 and 2010. Thus, the bigger budget crisis still lingers despite this 1% savings.


Now we are starting to find out that may be will not even get the measly 1% savings and that the legalisation will actually increase the federal deficit, contrary to all of the hype that it would not prior to passage. In an Associated Press article today by Ricardo Alonso-Zaldivar, the Congressional Budget Office (CBO), the same organization that the Democrats touted to highlight for their rosy predictions leading up to the passage, has come out with a report stating that the new law could potentially add another $115 billion in unaccounted for Federal expenditures over the first ten years. Thus, if we are to believe the CBO both prior to and after the bill passed, we will not see savings in Federal spending of $143 billion over ten years but possibly only $28 billion over ten years. This comes out to .2% of just the deficit this administration will run up this year.


The White House claims that they did not have to count these expenses since they will be voted on at a later time by Congress and may or may not happen. Apparently, the legislation did not make it mandatory to fund certain included programs but positioned it that they would have to be funded by future Congressional bills. However, you cannot have it both ways. You cannot tout the benefits of certain programs that were included in the legislation but not count the potential expense of that program. You either get the benefit of the programs' public relations value AND count the programs' expenses or you do not get the public relations benefit of including the program and you exclude the expenses. Much like the ten years of revenue but only six years of expense shenanigans described above, this is voodoo accounting and budgeting.


Why didn't the CBO identify these additional costs previously? According to the article, they just did not have the time prior to the voting. This obviously raises the issue of whether or not Obama, Reid, Pelosi, and other Democrats knew how bad the numbers would be and pushed through this massive bill before the full truth was brought to light.


The CBO also said today that costs could go even higher since "the legislation authorizes several programs without setting specific funding levels." More voodoo accounting. The Democrats wanted the benefit of more and more programs included in the legislation but did not count the costs of implementing those programs. Given how quickly the numbers are falling apart relative to Obama care, I think we can be pretty confident that this bill is likely to end up as a tremendous burden on the country's economy and the citizens that have to fund it.


If yo do not believe this AP report, I ask you to consider a short article in the June issue of Reason magazine by Peter Suderman. According to Mr. Suderman, 24 hours after releasing the Obama Care's preliminary findings that there would be about $140 billion in Federal deficit reduction in the first tens years, the CBO also released a report, requested by a Republican Congressman, concerning the so-called "doc fix" that would increase the amount of funds available "which would prevent doctors' Medicare payments from being cut." This fix was originally in the early drafts of the Democrats' health care draft legislation but was removed by Henry Reid after he used its inclusion to get the endorsement of the American Medical Association. The costs of the fix, which will now be voted on under a separate piece of legislation is about $200 billion over the next ten years.

This would wipe out the $143 billion in savings and make Obama Care a deficit increaser if it had stayed in the final bill. More voodoo accounting, lets only include those expenses that get us to the favorable number we want. Thus, if you include this $200 billion headache, the bill does not reduce the Federal Budget by $143 billion, it actually increases it by about $57 billion. Now we do not even get the .2% reduction we calculated above.

The article goes on to report that the CBO found that if some of the legislation's assumptions do not materialize (e.g. cuts to Medicare payments, slowing of insurance subsidies, and implementation of taxes on high end insurance plans) the deficit in the second ten years of the legislation will actually run a deficit of $600 billion, not a surplus of $1.2 TRILLION that the Democrats claim. Thus, the second ten year estimate could easily be off by almost $2 TRILLION. Thus, within a few paragraphs we have gone from seeing budget surpluses to possibly seeing TRILLION deficits.

Do not believe the Associated Press and Reason magazine? Consider an article in the June issue of Kiplingers magazine. According to author Kimberly Lankford, the health care reform legalisation sets up a long term care program that companies can choose to participate in. However, the program is expected to provide only $50 a day in assistance once you are enrolled and you cannot get any benefits until you have paid into the program for five years. According to the article, the average cost per day of a nursing home is about $219 a day. The article claims that the premium payments will be in line with what a private policy would cost but would provide only about a third of the value. Thus, the legislation has underfunded this program relative to private plans, meaning either the program is a bust or additional funds will be needed to make it competitive, more voodoo accounting?

All of these examples really go beyond voodoo accounting, they definitely raise the question of whether there was outright deceit going on in order to make the legislation hit certain targets. The only other explanation is that the supporters of the legislation really do not know how to count. In either case, the legislation is a big expensive bust because it will cost much more than originally touted and the underlying problems causing much of our high health care costs will still exist. Americans will still be too fat, will still smoke too much, will still not exercise enough and will not have had additional funding directed to attacking the problems of cancer and Alzheimer's.

The only solution is to start over and implement the ideals suggested in Step 28 in "Love My Country, Loathe My Government." We need to get smart, expert Americans involved from a variety of disciplines to write the proper health care reform legislation and get the voodoo political class, voodoo accounting and their lobbyist accomplices out of the picture.







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