Monday, March 22, 2010

Health Care Costs

I have a number of colleagues who think that anyone who worries about the increased cost of health care under the new bill is either an idiot, or an ideologue.

Many of them believe, however, that anything the CBO says, or that is printed in the NYTimes, has credibility.

So, here is a past head of the CBO, writing in the NYTimes.

Excerpt:

ON Thursday, the Congressional Budget Office reported that, if enacted, the latest health care reform legislation would, over the next 10 years, cost about $950 billion, but because it would raise some revenues and lower some costs, it would also lower federal deficits by $138 billion. In other words, a bill that would set up two new entitlement spending programs — health insurance subsidies and long-term health care benefits — would actually improve the nation’s bottom line.

Could this really be true? How can the budget office give a green light to a bill that commits the federal government to spending nearly $1 trillion more over the next 10 years?

The answer, unfortunately, is that the budget office is required to take written legislation at face value and not second-guess the plausibility of what it is handed. So fantasy in, fantasy out.

In reality, if you strip out all the gimmicks and budgetary games and rework the calculus, a wholly different picture emerges: The health care reform legislation would raise, not lower, federal deficits, by $562 billion.


You can argue, if you want, about quality, and the advantages of more complete coverage. I may not agree, but at least those points are arguable. But you can't seriously believe that this health care bill is anything but a giant cost boondoggle, creating deficits that will affect us for the rest of our lives. This is not the sort of legacy I wanted to leave my children. "We couldn't solve the problem, and so we just charged it all on credit cards!"

UPDATE: Some interesting numbers (thanks to Angry Alex)

5 comments:

sean said...

Congress estimated Medicare’s cost at $12 billion for 1990 (adjusted for inflation) when the program kicked off in 1965. Medicare cost $107 billion in 1990 and is quickly approaching $500 billion.

Max Sawicky said...

Writing for the funny papers, Dougie is not subject to the same constraints and standards that he upheld at CBO, where he did a good job. Now he's in campaign mode and can write drivel.

Re: front-loading revenues and back-loading spending, I believe that when that nets out positive, its called saving.

The alleged double-counting of SS revenue, which Dougie understands very well, arises from following the standard convention of counting cash in-go against deficits as well as credits to the Trust Fund, which will thereby be made more solvent in the process. If you don't think Trust Fund assets are worth anything, you aren't much of a libertarian, since the Fund's wealth resides in THE POWER TO TAX.

The fact that this bill does not fix Medicare has no bearing on whether, in and of itself, it reduces deficits in the relevant budget windows, relative to no bill being passed.

And John Goodman, to whom you linked, is the clown who fired Bruce Bartlett for being critical of the big gov spending of G.W. Bush!

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