Monday, March 19, 2012

Surprise! Surprise! Obama Care Costs More Than Expected (But Who Did Not See That Coming)

The Congressional Budget Office (CBO) released its latest findings with regard to Obama Care last week, including its new ten year predictions of a various number of components. Since the administration and Democrats touted the original CBO analyses as being the definitive and accurate assessment of Obama Care's impacts, they cannot dispute the latest findings without looking like hypocrites.

Before looking at the latest CBO results, consider the following infamous quotes from the President in 2010 when Obama Care was enacted:

“No matter how we reform health care, we will keep this promise to the American people. If you like your doctor, you will be able to keep your doctor, period. If you like your health care plan, you’ll be able to keep your health care plan, period. No one will take it away, no matter what.”

"Now, add it all up, and the plan I'm proposing will cost around $900 billion over 10 years -- less than we have spent on the Iraq and Afghanistan wars, and less than the tax cuts for the wealthiest few Americans that Congress passed at the beginning of the previous administration. Now, most of these costs will be paid for with money already being spent -- but spent badly -- in the existing health care system. The plan will not add to our deficit. The middle class will realize greater security, not higher taxes. And if we are able to slow the growth of health care costs by just one-tenth of 1 percent each year -- one-tenth of 1 percent -- it will actually reduce the deficit by $4 trillion over the long term."

That was 2010 and today is today, according to the CBO:

- The latest ten year view from the CBO estimates that the gross cost of Obama Care, which originally was pegged at $940 billion, is really closer to $1.76 TRILLION, almost twice what Obama claimed the cost would be. Guess the promise of $900 billion is not going to happen.

From the CBO Report: "The ACA’s provisions related to insurance coverage are now projected to have a net cost of $1,252 billion over the 2012–2022 period (see Table 2, following the text); that amount represents a gross cost to the federal government of $1,762 billion, offset in part by $510 billion in receipts and other budgetary effects (primarily revenues from penalties and other sources)."

- The latest ten year view from the CBO estimates that upwards of 4 million Americans will lose their current health care insurance coverage from their employers. Guess the promise that if you like your health care plan, you can keep it, period, is not going to happen.

From the CBO report: "The extent of the changes varies from year to year, but in 2016, for example, the ACA (Obama Care) is now estimated to reduce the number of people receiving health insurance coverage through an employer by an additional 4 million enrollees relative to the March 2011 projections."

- The President asserts that the legislation will reduce the national debt by $4 TRILLION over the long term. Of course, like the politician he is, he leaves "long term" undefined or explain how this law will actually attain the $4 TRILLION reduction. When the law was originally passed, the CBO estimated that the national debt would be reduced by about $130 billion over the first ten years.

Even if we believed this estimate, which we did not and do not, at this rate it would take over 30 years to attain this $4 TRILLION savings. But it will take much more than that, even if you believe the $130 estimate, which we did not and do not, since that $130 billion estimate included TEN years of taxes and revenue and only SIX years of costs and expenses.

Long term, every ten year period would have TEN years of taxes and revenue and TEN years of costs and expenses, making the attainment of the mysterious $4 TRILLION savings far longer to attain since the first ten year estimate of $130 billion is not typical of the long term picture. Guess that $4 TRILLION in national debt savings is not reality.

From the actual CBO report: "The addition of 2022 to the projection period has the effect of increasing the costs of the coverage provisions of the ACA (aka Obama Care) relative to those projected in March 2011 for the 2012–2021 period because that change adds a year in which the expansion of eligibility for Medicaid and subsidies for health insurance purchased through the exchanges will be in effect."

A final finding of the latest CBO report, that is not explicitly covered by the above comments from the President, was the intent of the legislation to get health care insurance coverage for every American. However, the latest estimate shows that, according to the CBO, two million fewer American will have coverage by 2016 and later in the ten year period, tens of millions of American will still not have health insurance coverage. Does not sound like a very good piece of legislation since its intent to cover everyone is still tens of millions of people short of that goal after ten years.

From the actual CBO report: "The revised estimate of the law's coverage provisions shows about 2 million fewer people gaining coverage by 2016, reducing the number of uninsured Americans by 30 million instead of the 32 million projected a year ago. That would leave about 27 million people uninsured in 2016, two years after the law's insurance exchanges go online...The share of legal nonelderly residents with insurance is projected to rise from 82 percent in 2012 to 93 percent by 2022."

Surprise, surprise, the President's promises apparently have no chance of ever coming true. The really scary thing about the above findings from the CBO is that the gross cost doubled within just two years of passage, the number of Americans who were not supposed to lose their employer provided health insurance coverage went from zero to four million in just two years, and the expected deterioration of the original financials, due to the balancing of true costs and true revenue/tax recipients is happening within just two years.

But this should come as no surprise to us since we already identified the fallacies of Obama Care:
  • Many of the major reasons why America's health care costs keep going up is that Americans smoke too much, Americans eat too much, Americans eat too much of the wrong kind of food, and Americans do not exercise enough. If these problems were properly addressed, the amount of heart disease, diabetes, and cancer would plummet, significantly reducing health care costs. Thus, the Obama administration took a public health issue and tried to address it with a taxation and government bureaucracy solution, an approach doomed to failure. http://loathemygovernment.blogspot.com/2011/06/ignorance-lying-and-growing-nonsense-of.html
  • The head actuary of Medicare and Medicaid recently reported that his expert analysis now shows that Obama Care will cost the country an additional $300 billion in national debt in the first ten years of implementation vs. having never having been implemented at all. Thus, rather than reduce the national debt by $4 TRILLION, within two years of that estimate and boast, we see that it will actually increase the national debt by TRILLIONS "over the long term."
  • Of course, one of the biggest objections to this failed piece of legislation is the precedent it sets by forcing all Americans to purchase a service or product that they may no necessarily want to possess. The potential for abuse down the road, government and the political class forcing Americans to purchase a product or service, is not consistent with living in a democracy.
  • America is getting older. As the Baby Boomer generation ages, the average in this country gets older and the chance of debilitating aging diseases such as dementia and Alzheimer's, and the high costs of servicing these old age diseases, will skyrocket. This situation requires extensive investment in old age disease control and eradication, not just more taxes, more government bureaucracy and more political class bungling that Obama Care will cause.
  • Many states have been able to reduce their health care costs with significant tort reform laws and procedures. However, tort reform in Obama Care, despite its success at the state level, is minimal, likely in a nod to the ABA and its legal lobbyists.
  • The above higher costs of implementation, currently at $1.76 TRILLION vs. the original cost of around $900 billion is likely to get even worse with the CBO's revision next year. Why? That revision will finally have TEN years worth of both expenses and costs and TEN years worth of revenue/taxes. The fakeness of the original estimate, TEN years of good vs. SIX years of bad, will finally be wiped out.
The political class again comes up way short and disappointing when it comes to legislating and trying to solve a problem. As with everything else they touch, they never understood the root causes of the problem, they never understood the unintended consequences, they never understood the interactions of reality, and they never had the imagination, creativity, or smarts to resolve the health care cost problem.

All very sad and disappointing. The only thing that can draw a smile in this whole fiasco are the words of Democrats Nancy Peolsi and John Conyers. Ms. Pelosi issued the famous words: "We have to pass the health care bill so that you can find out what is in it." How funny, if only in a sad way. http://www.youtube.com/watch?v=9uC4bXmcUvw

In one of the biggest and most impactful pieces of legislation to ever be passed by Congress, the Speaker of The House Of Representatives has no idea what is in the legislation BEFORE it is developed, approved, and enacted. Rather than "Ready, Aim, Fire" we find out that our politicians behave like "Ready, Fire, Aim." And in the case of Obama Care, their aim could not have been any worse.

And Conyers is not much better. When publicly asked whether he had read the legislation before he voted on it, his reaction is almost one of indignation, as if he is not responsible for reading bills he votes on. I had always thought that was one of the primary responsibilities of being in Congress, write, READ, and vote on legislation, but what do I know. http://www.youtube.com/watch?v=ACbwND52rrw


When the only redeeming qualities of a law is the incompetence shown by those that enacted the law, we should not be surprised when major issues like health care costs get even worse when our politicans act. No surprise there.




Note: The entire update CBO report can be found at:  http://www.cbo.gov/sites/default/files/cbofiles/attachments/03-13-Coverage%20Estimates.pdfated


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