ObamaCare: $2 trillion, or 2.5 ’stimulus’ bills

To show you how far down the rabbit hole we’ve gone, Democrats were pleased yesterday when the Congressional Budget Office gave the two ObamaCare bills — the Senate bill plus the “reconciliation” bill the House would use to “fix” it — a combined cost of “only” $940,000,000,000 over 10 years (see page 8). But as you already know if you’ve been paying attention to this blog, there’s more here than the headline number suggests.

First, as the Weekly Standard’s Jeffrey Anderson points out, CBO begins the 10-year clock in 2010. What year is it right now? Oh yes, 2010. When did the 2010 budget year begin? Oh yes, Oct. 1, 2009 — more than five months ago.

Granted, this is not an unusual CBO convention. But it is a special case because the vast majority of the new ObamaCare expenditures don’t kick in for four more years — which is unusual for a piece of legislation. So, the inclusion of a cheap year rather than a full-price year makes a huge difference in the cost estimate.

For the record, this four-year delay is shown quite clearly in two places:

  • the estimate that the number of uninsured persons (not uninsured “Americans,” for reasons I’ll explain in a post later today) would not begin falling until 2014: see page 7; and
  • the estimate that the gross costs of the bill are only $17 billion in the years 2010-2013, compared to $923 billion from 2014 to 2019; see page 8.

If we begin the 10-year clock for this bill in 2014, and assume the 7.5 percent growth in annual gross costs which the CBO applies in 2018 and 2019 would continue in later years, the cost from 2014-2023 would be $2 trillion. That’s equivalent to 2.5 “stimulus” bills. Anderson writes that ObamaCare includes more than $1 trillion in new taxes to help pay for itself.

Even if we are more charitable, and begin counting next year rather than this year with the same assumptions as above, the 10-year cost from 2011-2020 would be $1.2 trillion.

Ah, but what about net costs — that is, the effect on the budget deficit? Didn’t the CBO say the deficit would fall by a combined $138 billion from 2010 to 2019?

Yes, it did. But where does that $138 billion come from? Well, the majority of it comes from new taxes, which are a legitimate debate policy debate, even if I come down strongly against the new levies.

But $493 billion of the bill’s budget offsets come from reductions in federal spending on Medicare and Medicaid. The bulk of this half-trillion comes from two places. The first is gutting Medicare Advantage ($132 billion). The second is an assumption that Congress will reduce payments to doctors who see Medicare patients ($157 billion) — something that no Congress has ever actually done.

And here again, in all cases of spending reductions, the vast majority of the changes come from 2014 on. That means the net reduction in the deficit is contingent on future Congresses following through on what this Congress promises to do — and what no past Congress has ever done.

In reality, as opposed to paper, ObamaCare is highly likely to increase the deficit by hundreds of billions of dollars rather than cut it. Reps. John Lewis, Hank Johnson, David Scott, John Barrow and Sanford Bishop — Georgia’s Democrats in Congress who either plan to vote for ObamaCare or are on the fence about it — may not care about this. But the rest of us should.

114 comments Add your comment

First

March 19th, 2010
11:44 am

First! Oh wait, this isn’t the sports section.

Jefferson

March 19th, 2010
11:46 am

It’s a start, eh ?

Whacks Eloquent

March 19th, 2010
12:01 pm

Too many real numbers for the liberals, Kyle. Remember, we won’t know what this plan does till we pass it?

Hope ya don’t mind, but I want to plug this priceless column – stirrin’ the hornets’ nest! Hey it starts out “Barack Obama is the best thing that has happened to America in the last 100 years…” Good eh? Read on:

http://www.aspentimes.com/article/20100228/ASPENWEEKLY/100229854/0/FRONTPAGE

Dave

March 19th, 2010
12:09 pm

It’s disingenuous to compare the cost of the stimulus which is spent over 3 years to Health Care spending over 10 year periods.

Here’s a better suggestion: compare it to the War in Iraq. That’s cost $700 Billion since 2001. Hmmm… War with country that had no WMDs…. or insure 30 million people. That’s a tough choice.

Kyle Wingfield

March 19th, 2010
12:13 pm

Fine, Dave. Using your number of $700 billion over 10 years for the Iraq war, we’re talking about three Iraq wars. Feel better now?

Kyle Wingfield

March 19th, 2010
12:15 pm

Btw: LA, dewstar and Horace can resume posting today. But if y’all resume your name-calling, you’ll be off for two weeks.

Ragnar Danneskjöld

March 19th, 2010
12:23 pm

I suppose the good news is that these massive expenditure increases, accompanied (as the tooth fairy promises) by reductions in the deficit, ensures a significant contraction in the private capital in the economy. Such a capital contraction should ensure the depression will deepen, and will extend its length. Oh, I guess that is not necessarily good news.

Horrible Horrace

March 19th, 2010
12:33 pm

HIIIIIIDIE HOOO KYLE!!

retiredds

March 19th, 2010
1:01 pm

the wars go on. wars good. health care bad.

Newt Rock-knee

March 19th, 2010
1:04 pm

It will be 100% wasted money. Nothing needs to be fixed in the healthcare market (not “system”) anyway. Last polls I saw showed seventy-something percent of Americans are happy with their insurance. And the opinions of non-Americans (illegals) don’t matter — if they don’t like it, they should leave. The Bush administration was right to do nothing on health care for the past 8 years. And Republicans should stop saying that they agree that “the system is broken” and “of course something needs to be done”. Costs are not too high, except for people who are unwilling to work for a living. Access is just fine. What’s the problem?

JF McNamara

March 19th, 2010
1:07 pm

The estimate for the Iraqi war was $0. It was going to pay for itself with oil profits from the newly freed country. Remember that?

We don’t know what is going to happen, and any budget is just a guess based on a bunch of “what if” parameters. The inital estimate will be long forgotten after a year and we will be making decisions based on the reality.

If they pass this, you can always change it for the better later or scrap it. In any event, its unlikely that any of our lives will be worse than they already are.

Republicans are just politicing with this bluster. If it works, no one will call them out for being against it. If it doesn’t work, they can say I told you so.

Duane McDonald

March 19th, 2010
1:09 pm

Like most of the things our House and Senate do currently this “health Insurance” deal is crooked. Most people who seem to trust these crooks would NEVER buy a used car from them.
That probably sums up the character of our elected representatives.

Get Real

March 19th, 2010
1:20 pm

I love it when Obozo lies to his fellow Dimocrats and tells them voting No won’t help them at the polls! They should realize every time Obozo has stumped for a fellow Dimocrat, they have lost the election. That should tell them something but they just keep on drinking the Kool Aid he serves them. Kinda like leading Lemmings off the cliff into the sea of no return!

At least under Bush’s watch, he actually did something about terrorism. Obozo has America as a sitting duck just waiting the impending attack!
Trying terrorists on US Soil with the same rights as American Citizens!
Spending like there’s no tomorrow and taking vacations all on our tax dollars! IF his Obamacare passes the good doctors will start new careers, the economy will tank even further, unemployment will go higher and he will be one step further turning America into his Hugo Chevez Socialist Government!

The Anti-Wooten

March 19th, 2010
1:20 pm

Nice sentiment there Joan1, I’m certain that the victims of 9/11 and most other New Yorkers might disagree with you.

Kinda Cheating

March 19th, 2010
1:27 pm

I guess it’s a sore spot with me that our Presidentand his so called party would promise the following, as written in the morning edition’ just to get a “Yes” vote: “Rep. Bart Gordon of Tennessee, a moderate Democrat who is retiring at the end of the year, announced he would vote in favor of the bill after opposing an earlier version. He did so as Democratic leaders included in their revisions a provision worth an estimated $99 million over two years in higher Medicaid payments to Tennessee hospitals that treat large numbers of uninsured.

neo-Carlinist

March 19th, 2010
1:29 pm

KW, I have to agree with Dave (he beat me to the punch, as I was on Barr’s blog this AM). when you elevate this discussion above the he said/she said (political tripe), it is very simple; politicians serve their masters and push legislation regardless of whether or not said bill is good or bad for the country, economy, children, etc. as a previous poster has put it, it’s the welfare state vs. the warfare state and it really doesn’t matter to the citizens (taxpayers), beyind the fact that we pick up the tab. so, pick your poison; $1 trillion+ in a futile “war on terrorism – including Iraq” and/or healthcare for everyone (even those who don’t want it).

The Anti-Wooten

March 19th, 2010
1:33 pm

Get Real,

A couple of points about your statements:

*Bush DID in fact do something about terrorism, he increased the number and locations of terrorists around the world. There were no “Al Queada in Iraq” prior to his bumbling War to Avenge My Daddy.

*You Randian suggestion that doctors will leave the profession is fairly preposterous and based on some flimsy poll that the NEJM has disavowed. What are they going to do? Become truck drivers.

Linda

March 19th, 2010
1:35 pm

We have several choices to read the bill (2300 pages) + the reconciliation bill (170 pages) (2470 pages) within these 72 hours which started yesterday:
* read straight thru until Sunday–34.3 pages per hour
* read straight thru until Sunday except sleeping–51.46 pages per hour
* read straight thru until Sunday during what’s considered normal business hours–114 pages per hour
* be politically correct & not read it at all, like Congress does
* have the alphabet acolyte media read it for you & believe in their interpretation
* hope that it passes so “we can find out what’s in it,” as suggested by Pelosi
* hope that it doesn’t pass so we can keep our country intact.

Churchill's MOM

March 19th, 2010
1:37 pm

Personally I’ll be happy when this food fight is over. As I have said before, the RINO party is owned by the Insurance Companies and the Democratic party is owned by the Lawyers & Doctors. Since my husband is a doctor I should be for the bill but I see many things wrong with it as it stands today, too bad neither of these parties work for the taxpayer and US Citizen.

By the way there is an amnesty bill working its way through the agriculture committee, obviously Saxby has a very short memory.

The Udder side!!

March 19th, 2010
1:47 pm

Kyle,

If you are going to quote CBO numbers, why not tell us that they said this bill will cut the deficit by 138 Billion over the first ten years and by 1 trillion in the second decade??? I guess those figure don’t fit so well with your set, Huh???

Reality

March 19th, 2010
1:47 pm

Yeah, Kyle…. you know better than everyone else. While the accountants and everyone else that worked on this in Washington that crunches the numbers says that this healthcare reform bill will decrease the deficit over the next 10 years – they are wrong and you are right.

LOL! Conservatives are so egotistical and WRONG.

We all need to simply accept that this will pass one way or the other. Then we all can focus on the jobs and other issues. And, we all will see that the Earth won’t explode once this passes.

NowReally

March 19th, 2010
1:50 pm

Oh Please!!! The GOP wouldn’t pass a healthcare bill even if it were paid for in full.

They lie about being in favor of expanding Medicare to the working poor. They have a huge problem with social security and wanted to privatize it.

Boy, I can only imagine what the old folks would think about that NOW, if it had been successful.

ArtVandelay

March 19th, 2010
1:51 pm

Kyle,

Did you take a minute to crunch any numbers around if we DON’T do this…didn’t think so. Healthcare costs are 17% of GDP, if we do nothing in 30 years it will be 30% of GDP! All I hear from opponents of this bill is, it costs too much, it won’t help, they’re ramming it through yet you offer NO alternatives.

Being in healthcare finance I can tell you without something being done in 5-10 years healthcare will be where the banks are now. 1 Trillion will seem like a drop in the bucket compared to what it will cost to bailout the healthcare system

Get Real

March 19th, 2010
1:57 pm

A couple of points about your statements:

*Bush DID in fact do something about terrorism, he increased the number and locations of terrorists around the world. There were no “Al Queada in Iraq” prior to his bumbling War to Avenge My Daddy.

Well, seems to me that he flushed the terrorists out and brought them within shooting range instead of them hiding in the hills! At least they came to us!

*You Randian suggestion that doctors will leave the profession is fairly preposterous and based on some flimsy poll that the NEJM has disavowed. What are they going to do? Become truck drivers.

I don’t know what professions they will take on but I doubt it will be a truck driver. I’m sure they will displace a lot of people in their current profession because most of them are fairly intellegent. I don’t see them paying the tuition and spending the hours in residency to become doctors to be paid by Obamacare under his Socialist Policies though! If Obamacare was so damn good for the American Public over 70% wouldn’t be against it and Obozo, Pelosi and Reid wouldn’t have to be using strong arm tactics, making back room deals and flying someone on Air Force One to convince them to vote Yes!

DEWSTARPATH

March 19th, 2010
1:59 pm

Thank you, Kyle.

Fix-It

March 19th, 2010
2:00 pm

Hello Dave, is there anybody in there? 700 billion in 10 years… How about 2 TRILLION in less than a year, boy I tell you liberals really need to take a math class…

joan1

March 19th, 2010
2:00 pm

All of you talk about healthcare costs. What on earth does this bill do to cut healthcare costs? All it does is make healthcare more accessible (meaning now immigrants and others won’t have to go to the emergency rooms, but can now book appointments). You will still have to pay for it, if you are paying now, you will just pay more. Of course, if you aren’t paying now, you have nothing to worry about. Big brother is all over it.

STEINER

March 19th, 2010
2:01 pm

Just make sure that we give these people who want to kill us and blow us up all their rights and plenty of lawyers so they can get the terrorists off the hook so they can go and try to blow us up again….Let an American get caught in Iran trying to blow up an Iranian airline and see what rights the Iranians would give him….WE GOTTA BE THE STUPIDEST NATION ON EARTH!!!!

Kyle Wingfield

March 19th, 2010
2:03 pm

Udder Side: I *did* mention the $138 billion…and then explained why the assumptions required to arrive at that number are false ones. But I guess reading the post “don’t fit so well” with what you’d like to believe, huh???

Reality: If you take everything at face value, then feel free to take this CBO score at face value too, and pay no attention to how the number-crunchers arrived at that figure.

And since someone will blast me for this: I’m not saying the CBO lied, or that the CBO is being devious here. The CBO has certain rules that it follows in scoring a bill, and Democrats have written this bill with those rules in mind to get as favorable a score as possible, regardless of what will happen in the real world. I’ve written about this in past posts.

Yes, both parties do it. No, that doesn’t make it right to do it in this case. And no, you shouldn’t expect a response if you make that argument. That should about cover it…

Fix-It

March 19th, 2010
2:04 pm

The Udder side!, man you guys are sitting ducks…. Hey Utter can you name me one government project that was EVER on budget? How about Fanny and Freddy, no, the Post Office, no, Social Security, no, Medicaid, no……these are all programs that don’t work because of government, so you are really illiterate enough to think Obozocare would be any different?

John

March 19th, 2010
2:05 pm

So when the right does not like what the CBO says is happening, they spin it into what could, might, or we wish would happen. It is disengenuous to pretend to be ignorant as to why everything does not start next week. These delayed programs will take that long ( in not longer) to set up and put into place.

Lets also compair this to the plan the GOP put in place when they where in control. The lets do nothing plan is more than twice as expensive as this bill.

dewstarpath

March 19th, 2010
2:07 pm

Joan1 – I agree with Anti-Wooten regarding your post. But as far
as the state of the government is concerned – at least it’s not the 1960s.
There’s something to be said for the process of voting without having to
deal with assasinations. A lot was sacrificed for that right.

Mike

March 19th, 2010
2:13 pm

I had heard that Obamacare was going to damage Medicare Advantage plans, but I haven’t heard how. can you explain?

STEINER

March 19th, 2010
2:13 pm

Can I now pick up my Obama Health Care Check on the same day I pick up my check for Welfare and Food Stamps….I will be ticked off if I have to make 2 trips, just give it all to me on the same day….

CJ

March 19th, 2010
2:17 pm

ObamaCare is highly likely to increase the deficit by hundreds of billions of dollars rather than cut it.

Please indulge me while I explain why I believe that Kyle is being dishonest.

First, he leaves readers with the impression that their taxes will go up under the proposed legislation. Because of articles like this one, many Americans continue operating under the false impression that they received tax increases under Obama when, in fact, they received significant tax cuts (one-third of last years’ stimulus consisted of tax cuts). Kyle continues such folly by referencing generic “new taxes” above. Specifics would interfere with his intent to mislead.

Second, Kyle was proudly flying CBO scores on early drafts of the legislation like a Confederate flag last year when Congress was scoring various proposals under consideration in the various committees. He loved the CBO when they told him what he wanted to hear. Now the CBO score can’t be trusted for any number of reasons dreamed up by the right-wing noisemakers, while Kyle simultaneously ignores economists who say that the deficit reductions predicted by the CBO are likely to be understated.

Third, Kyle manipulates the numbers to recalculate costs under various ten-year time lines, but again, simultaneously ignores offsetting savings and revenues over those same ten-year timelines. Hackery at its worst.

Pay-as-you-go rules have been reinstated by the Democratic Congress after having been abandoned during the years of Republican rule and recently voted against by most, if not all, Republicans. If changes are made to the legislation in the future, then unless Republicans take control again, there’s every reason to believe that those changes will be paid for.

HCR is the largest deficit reduction legislation in history. It will eliminate the practice of denying or rescinding coverage because of pre-existing conditions, eliminate limits on coverage causing people to run out of insurance when they need it most, reduce the astronomical growth rates of our insurance premiums, and start to reign in the growth of health care costs across the board. It’s far from perfect. But it’s a great start.

Kyle Wingfield

March 19th, 2010
2:19 pm

John, I understand that it will take awhile to set up the programs. But what’s really disingenuous here is acting as if those four years should be counted in the 10-year cost of those programs.

Mike: I’m not sure how exactly Medicare Advantage would be cut, only that the CBO said there would be $132 billion in cuts over 10 years (see page 13 of the document linked in my post).

The Udder side!!

March 19th, 2010
2:23 pm

Kyle Wingfield

March 19th, 2010
2:03 pm

So Kyle, please tell us what YOU propose we do???? You seems to do a really good job a parroting the company line, why not try pulling the RNC hand from under your skirt and suggest something….. it kills me that Your folks bark so loud about being all about america, but have no problem standing on the sideline and cheerleading as these companies P—s all over the American people!!

Glenn

March 19th, 2010
2:33 pm

I want healthcare reform as much as anyone with sense but this really isn’t a good bill from what I now can see . I think it maybe better than doing nothing but it isn’t going to bring down costs. I don’t see how anybody could view this bill as socialist . A public option really is needed or something drastic . Maybe getting rid of insurance all together & letting the market place decide costs would be better . I don’t know . It seems like this bill gives the 800 pound gorilla a pillow .

HDB

March 19th, 2010
2:37 pm

Welcome back, dewstar….

Look…I’ve always said that the first iterationof ANY process has its flaws….look at all of revisions that’s happened to Windows…..and it’s still the operating system most used on computers. HCR will be likewise; the initial iternation will have the most flaws….but as we progress as a nation, changes will be made to the plan making it better for all!!

We had to start SOMEWHERE!! Republicans wanted to maintain the status quo….when 1/6th of the nation’s economy is growing faster than the rate of inflation and COLAs combined….and is a factor as to why Corporate American isn’t hiring!!!

Cross-border sales won’t work; tort reform still increases rates…..laissez-faire economics doesn’t work with health care issues for every American!!!

HDB

March 19th, 2010
2:40 pm

Welcome back, Horace and LA!!

Kyle Wingfield

March 19th, 2010
2:41 pm

Udder, I have written several columns about alternative health-care fixes. They’re very easy to find on this blog. But somehow I think you’ll dismiss them as some kind of company line.

HDB: We’ve been through this before. Being against this bill is not the same as wanting to maintain the status quo.

HDB

March 19th, 2010
2:43 pm

Kyle: Question – In your opinion, would Republicans had considered creating a baseline HMO funded by the government…and major/medical and catastrophic coverage sold by insurance companies?? In this aspect, the cost curve would shift, insurance companies would still be profitable (look at AFLAC!)…health care access would improve…

Opinion???

HDB

March 19th, 2010
2:45 pm

Kyle…in many circles, many people ARE just for maintaining the status quo!! Those who have had government health care do like it….some consistently rail against it…except when it suits their needs!!

Churchill's MOM

March 19th, 2010
2:51 pm

Mike 2:13 pm

Medicare advantage was set up as a demonstration program to show that insurance companies could do a better job (lower cost) than medicare but has ended up with the taxpayer paying the insurance companies 15% more than regular medicare when both programs statistically have the same outcomes. Insurance agents get a higher commission for selling advantage programs than medigap insurance so you can be sure that the insurance companies are making big bucks off the advantage plans.

Kyle Wingfield

March 19th, 2010
2:52 pm

HDB: If you mean a baseline HMO funded by the government *for everyone* then no, I don’t.

Churchill's MOM

March 19th, 2010
2:54 pm

Mike 2:13 pm

advantage programs are basically the medicare program that are managed by private insurance. The Insurer pays nothing for this service and gets some minor freebies from the insurance companies. Hope I have answered your question.

Churchill's MOM

March 19th, 2010
3:00 pm

Insurer should be insuree.. ie the covered person doesn’t pay an extra premium to the insurance company, the taxpayer writes the check. Like all insurance this is complicated & most of it makes no sense.

Linda

March 19th, 2010
3:01 pm

According to the American Academy of Family Physicians, there are only 100,000 family physicians in the US today & there will be a shortage of 40,000 by ‘20. The number of students from US medical schools going into family practice has dropped 51.8% since ‘97.
According to the US Dept. of Health & Human Services, there will be a shortage of 44,000 by ‘25.
According to a survey of physicians by Medicus published in the prestigious New England Journal of Medicine, if the health care bill passes, 46.3% of primary care doctors may leave the medical profession. They cite their freedom to make decisions regarding their patients’ care as well as their payments being cut. With the increasing cost of expenses, especially malpractice insurance, they not feel it will no longer be worth it.
We are being told the goal of the hc bill is to insure another 30 million Americans. We also know the immigration reform legislation is next. To insure another 46 million people, each family physician will add an average of another 460 patients. If 46% indeed leave, it’s 857 patients.
Family practice will become the family watching Grey’s Anatomy.
P.S. Family practitioners are already underpaid. You may determine this from the out-of-date magazines in their waiting rooms.

HDB

March 19th, 2010
3:02 pm

Kyle…if the government-funded baseline HMO eliminated undocumenteds, kept the abortion restriction (Hyde Amendment), and was paid for solely as a non-profit with 3% of taxes…..would that be a possible starting point with you??

CJ

March 19th, 2010
3:07 pm

Ezra Klein wrote, “…some conservatives are arguing that Democrats ‘gamed’ the CBO in order to get the score they wanted…Both parties go back-and-forth with CBO to try and get their legislation down to a price tag they’re comfortable with. But it’s not some sort of trick. In this case, Democrats changed their legislation so the subsidies grew more slowly over time and the excise tax would grow faster. In other words, CBO said that they’d need to do hard things their constituents wouldn’t like if they wanted to cut the deficit more, and they did them. That’s not gaming, it’s governing.”