June, 2014 The Unfolding Disaster That Is Obama Care, Part 4: By The Numbers... And the Numbers Are Not Good

This is our fourth update this month on the unfolding disaster that is Obama Care. Today we have put together a set of analyses and research that are very numbers oriented. Thus, the title of today’s approach, “By The Numbers.” By understanding the numbers better we can more fully see what a disaster Obama Care really is.

While everyone might have an opinion about reality, there really is only one true set of numbers that describe reality. The set of numbers we hope to explain below and a set of numbers that show how much the whole Obama Care effort has failed to accomplish its original goals is our objective today.

1) One of the original selling points the President made about Obama Care is although it was a massive piece of confusing legislation, somehow out of the confusion there would be no incremental negative impact on the national debt. Despite massive Federal subsidies to lower income Americans, a bailout fund for health insurance companies, dozens of new taxes, thousands and thousands of pages of new regulations, somehow all of this confusion was going to be national debt neutral or even a little positive.

Specifically:

• In March 2010, the Congressional Budget Office (CBO) estimated that the Obama Care health insurance provisions would cost the Federal government $788 billion between 2010 and 2019. 
• That cost would be more than offset by $511 billion in Federal government spending cuts, primarily to Medicare, and $420 billion in new Obama Care revenue streams, much of it generated by new taxes on hospital insurance and manufacturers of drugs and medical devices. 
• Thus, the CBO estimated at the time, the health care law would somehow miraculously reduce the national debt by $143 billion over 10 years, compared to the CBO’s non-Obama Care baseline view.
• The vast majority of the savings, about $124 billion, was supposed to come from the health care portion of the law and another $19 billion would be derived from changes to student loans and grants.

But things are not working out so well relative to this overly, overly optimistic view that helped get the legislation passed:

• Several programs within Obama Care that were supposed to be financially positive, e.g. the CLASS program, turned out to be bombs and were terminated early on, robbing a lot of the $124 billion surplus of a positive financial flow.
• The Obama administration illegally and unilaterally starting postponing the rollout of many elements of the plan, further reducing the offsetting revenue planned against the ever increasing costs of the legislation.
• The original ten year view that had arrived at the $124 billion surplus, basically included ten years worth of revenue but only seven years worth of costs. As we have gotten to a full rollout of the law, a new ten year view includes both a ten year view of Obama Care revenue and a ten year view of Obama Care costs and the original $788 billion ten year cost estimate is now over $2 trillion.

These are the current realities of the top line numbers of Obama Care. A more than doubling of the cost while the anticipated revenue streams have either been terminated or delayed. 

In fact, things have gotten so bad, so confusing, and so out of control that the CBO has actually made the following public statement that the CBO and the Joint Committee on Taxation “can no longer determine exactly how the provisions of the ACA [Obama Care] that are not related to the expansion of health insurance coverage have affected their projections of direct spending and revenues.” In other words, things are so screwed up that we cannot even figure out anymore what is going on relative to revenue, costs, impacts on the national debt or much of anything else.

Really bad when you have put forth a piece of legislation that is so large and so convoluted that budget and audit experts can no longer figure out what is actually going on. Consider the words of Charles Blahous, a senior research fellow at George Mason University, on why CBO’s inability to estimate the net effect of the law is “a real problem:” “The ACA’s financing provisions were assumed to be effective so as to get a favorable score out of CBO upon enactment, but no one is keeping track of whether they’re being enforced. We receive occasional updates on the gross costs of the law, but none on whether the previously projected savings provisions are producing what was originally projected.”

This is also known as flying blind and when the political class and government fly blind, it is usually the taxpayers that have to pay.

2) Let’s talk about a really interested set of numbers from a recent blog post in Amy Ridenour's National Center Blog. “If Obama Care Saves Lives, It Does So Very Inefficiently.” The piece and the analysis within was done by David Hogberg.

The analysis approach is very creative and sound. At the very base level, if the real reason for having a health care industry is to save lives, than a measure of any health care program or law should be how well and how efficiently it saves lives. Now, one could easily and correctly make the case that the purpose of a health care industry is also to alleviate pain and I would agree. But for this analysis, let’s see how well or how poorly Obama Care saves lives, a very basic measure of health care effectiveness.

The basis of this approach is to use the historical mortality data from the so-called Massachusetts Romney Care program that was launched in that state several years before Obama Care was launched nationally. In many respects, both health care laws are similar except for the fact that we have some actual historical numbers and data on Romney Care that we can use to extrapolate the likely impact of mortality by Obama Care. 

The analysis was embedded in the study, “Changes in Mortality After Massachusetts Health Care Reform. ” The study compared certain counties in Massachusetts with other, similar counties in the U.S. with similar demographic characteristics, both before and after Romney Care was implemented. The analysis and findings then proceed as follows:

• This comparative analysis found that after Romney Care was launched, Massachusetts counties had an average mortality rate 2.9% lower relative to the other counties. 
• The authors concluded that about every “830 adults gaining health insurance [prevented] 1 death per year.”
• Using costs associated with Romeny Care in Massachusetts, the blog post cites an analysis done by a Michael Cannon which estimates that $4 million was spent to save that one life out of 830 adults.
• The blog cites another similar analysis done by a Professor Harold Pollack which came up with a slightly less expensive figure of $3.3 million, less expensive but still not cheap.
• Combining these analysis with a formula developed by the Institute of Medicine shows that nationally about 30,395 people die each year from lack of insurance. 
• The Congressional Budget Office estimates that the Obama Care exchanges and the Medicaid expansion will cover 25 million, or 46 percent, of the 55 million uninsured by 2017. 
• Putting all of these numbers together and doing the Massachusetts calculations on a national basis we find that there would be 13,982 more lives saved nationally in 2017.
• The CBO has previously estimated that the net cost of expanding coverage under Obama Care will be about $142 billion in 2017. 
• If we divide that cost by the 13,982 lives saved by Obama Care providing insurance to Americans who were previously uninsured, the cost of saving one life is a staggering $10.1 million, far more than the very high Massachusetts cost of about $3-4 million per life saved.

Now, if you are that one person who is getting their life saved even at a cost of upwards of $10 million, then you do not care what the cost is. But consider what other approaches could have been used to save far more lives at a far less cost than Obama Care, as identified in the blog post:

• A 2009 research effort and article found that anti-smoking efforts had a median cost of $4,400 per year of life saved. 
• Other research shows that the cost per year of lives saved via hypertension screening efforts is about $79,832 per life. 
• Annually, the country loses an estimated 480,000 people due to smoking and 26,634 due to hypertension, far more than we lose due to a lack of health insurance.
• Outside of the blog post numbers, consider a recent article from Business Week which cited industry sources when explaining that there are about 5 million Americans today that suffer from nondurable Alzheimer’s disease, the number of sufferers will triple by 2050, and that the disease probably kills about 500,000 Americans a year.

These are root causes of our ever escalating health care costs, Eliminate or reduce these sources of death and suffering, and you would easily reduce the nation’s health care costs without a 2,500 page law that no one understands or can track. Obama missed a great legacy opportunity, similar to the legacy John F. Kennedy carved out for himself when he challenged the country to put a man on the moon within the decade of the 60s. 

How much more historic would it have been if Obama had declared that the country would wipe out half a million unnecessary deaths a year from smoking within the next ten years and put a plan together to do so? 

How much more historic would it have been if Obama had declared that the country would wipe out half a million unnecessary deaths a year by finding a cure for Alzheimer’s within the next ten years and put a plan together to do so? 

So much more good could have been done at a much lower cost from a mortality/saving Americans’ lives perspective than the failed approach of Obama Care. The numbers do not lie.

3) One final numbers discussion today. A recent analysis by Roll Call showed that the online health care exchanges were still having substantial problems more than  nine months after the launch back in late 2013. The Roll Call approach involved emailing health officials in all 50 states and Washington D.C. Their findings and the associated numbers include the following:

• There is probably at least 2.9 million individuals that still had not had their Obama Care applications processed. 
• 2.9 million unprocessed applications is equivalent to the combined populations of Montana, Wyoming and North and South Dakota. 
• Additionally, the 2.9 million unprocessed forms is only the estimate for people that are waiting for their INITIAL application to be processed. There are probably other delays still pending beyond the initial application process blockade.
• The survey also found that the largest piles of unprocessed applications were in states with very large populations: California (900,000 residents), Illinois (330,000), North Carolina (at least 298,840), Ohio (212,090), Virginia (183,643), Georgia (at least 159,313), Michigan (at least 123,381) and South Carolina (at least 113,429).

Nine months after rollout and millions of people still do not know their status relative to Obama Care health insurance coverage. A pathetic set of numbers no matter how you cut them. 

That will do it for our Obama Care unfolding disaster series for this month. We could go over other disasters but that is just too depressing to do at this point in time, given the grave disasters we have reviewed over the past four days. I am sure that next month will provide another juicy and depressing set of fiascos, lunacies, and expenses that will continue to spring up from the worst piece of legislation ever enacted.

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