CBO estimates the "effects on the deficit of insurance coverage provisions" in the House bill, H.R. 3200, to be $1,042 billion over a ten year period. (See page 2 of the estimate.) The $800B - $900B figure cited by the President may be his expectation of the still-private Baucus bill.
But the program is in effect for only about five of these ten years. In the House bill, the new coverage provision begins in year 4 (2013) and phase up to full effect only in year 6 (2015). To calculate the per-year cost, therefore, you should divide by roughly six, rather than by 10.
In addition, the new spending grows really fast, so the spending in year 10 (2019) is much bigger than in year six. CBO estimates the new coverage provisions would cost $202 B in 2019, rather than the President's $80 B (last Saturday) or $100 B (last Thursday) annual cost figures.
Even if you knock 20% off that estimate (assuming the still-private Baucus bill is 20% less expensive than the House bill), you're looking at a $160 B annual cost. In another document CBO estimated this 2019 cost would grow faster than 8% per year in the long run.
There are revenue provisions, of course, but it's not clear which of them--other than cutting Medicare Advantage, which gets you something over 10% of the final year cost--Obama's plan may include. It's also not clear whether he intends to subsidize people up to 300% or 400% of the poverty line. On the other hand, he promised to insure the uninsurable through a high-risk pool immediately, which will up the cost substantially.
But to my mind perhaps the most worrisome part is that anything Obama does to "pay" for this program is something that cannot be done to "pay" for our growing Medicare problem. Slashing provider reimbursements, Medicare advantage, etc, if it is done, is something that should be done in order to close the projected 3.4% budget gap in 2019. Once we've used them for new entitlements, we are less able to pay for the entitlements we've already got.
Excellent point. We should use any savings from eliminating waste and fraud in Medicare to fix Medicare, given that Medicare Part A Trust Fund runs out of money in 2017.
Although I'm not a big fan of the idea of cutting Social Security, I can at least imagine non-disastrous (from my perspective as a liberal) ways one could go about doing so. But, other than clamping down on Medicare Advantage, I just don't see how we can meaningfully do the same thing with respect to Medicare. Even relatively affluent old people would surely find it exceedingly difficult to find affordable insurance on their own. I mean, health insurance tends to be expensive in American even for young, healthy people. For a seventy-eight year old diabetic? Forget about it. Long term, there's going to have to be cost curve bending via changes to the way we compensate healthcare providers. I think simply "cutting" expenditures via, say, means-testing, is likely to be very inefficacious, or else next to impossible from the standpoint of political feasibility.
Anyway, with respect to universalizing health insurance for everybody else, I guess the "worrisome" part basically boils down to how one feels about the size of government. I don't want a bigger government just for the heck of it, but if that bigger government (especially in the context of a society that's growing richer over time) expands economic security or helps to bolster living standards, so be it. So, I guess this is a round about way of saying that, I expect in the end the bond market will force us to take care of deficits one way or another. I'd personally rather have the Democrats running the show when that day comes, because I regard higher taxes as preferable to shrinking government.
Why bother? As if left-winger care about the deficits. The more deficits the better, more excuse to jack up tax rates.
Weren't you listening? The President of the United States said that this won't add a *dime* to our deficit. Not one dime. And benefits won't be cut, at all. At all. In fact, they will INCREASE.
Surely nobody believes otherwise...
He also said that the “public option” would not be funded by the taxpayers. Who does he think pays for Medicare? It certainly isn’t fully-funded by the users through “premiums” (I hesitate to call them that).
If you take money from taxpayers to pay for Medicare but then cut Medicare by $500 Billion to spend that money on a “public option,” then yes, the taxpayers are paying for the “public option.”
Just like we’re already paying for Medicare’s mythical “lower administrative costs” which are diverted into other parts of the federal budget that are supported by the taxpayer. No doubt the same thing would happen with the “public option” should it be enacted.
No matter which specific plan is proposed it's always been the same formulation:
America spends far too much on health care. The only solution to this problem is to spend much, much more on health care.
The numbers will never work out as long as that's the underlying dynamic.
How's this?
Most Americans get satisfactory health care. But a not insubstantial number don't. We should do our best to help the people in the second group, while taking pains to maintain or improve on the status quo for the first group.
If you think it's unfair for some people to get good health care when others don't, it may satisfy your sense of justice for us to spend less overall while seeking to redistribute suffering more "equitably." But if your goal is the alleviation of human suffering, such an approach is perverse.
America doesn't spend enough on health care, as evidenced by the fact some people are getting woefully inadequate healthcare. Americans also don't generate enough health care resources, as evidenced by the wait for doctor's appointments for non-emergencies, etc.
The present health care system has real problems that need to be addressed. But the reforms most commonly discussed get it all wrong. What we need are targeted incentives to foster the creation of more health care resources and incentivize the treatment of the poor, coupled with a broader economic plan to grow the economy enough that we can pay for it.
Like TallDave wrote yesterday, the new program will generate fraud and waste that can be cut in a few years to fund Medicare gaps.
Perhaps my understanding of economics is too shallow but I don't understand how we can talk about figuring out the cost of new health care entitlements in any conventional way. From what I understand if you put more consumer money into a market for a limited resource that has little to no excess inventory then the market prices increase by exactly the amount of extra money you added.
Trying to find administrative savings to pay for health care is like a donkey trying to catch the carrot on the stick (unless it is the healthcare providers who are freed from administrative work, or there is some plan to train ex-administrators to become healthcare providers). Same goes for tax revenues since I doubt health care consumption is the first place people cut spending when they are taxed more.
It just seems like discussing the costs of the new entitlements and then finding a way to pay for them is a meaningless conversation. Once you've found a way to pay for the initial cost you've just raised the cost by your original shortfall and have to start all over again.