The Obamacare Abomination: Pricetag

So, having seen some conservative reactions to Obamacare, and looked at some possible recourse to it, why not look at what’s at stake? What will this really cost us, and how has that been misrepresented?

I’ve already talked about the problems with the CBO report that the Democrats relied upon to get Obamacare passed. There’s enough there to warrant me repeating some of it:

Kevin Glass at Townhall highlighted how the budget was manipulated for the CBO report:

1. Double-counting Medicare cuts as both saving Medicare and spending on new programs

2. Counting revenue that must be used for future spending as deficit-reducing savings

3. Starting revenue provisions immediately while delaying spending provisions until 2014

4. Carefully writing the language so that the CBO can’t count the individual mandate in the cost of the bill (which they had done in the past)

5. Claiming that additional tax money raised will go to pay for spending in the bill when it must be used for other programs

Philip Klein at American Spectator picked up where Glass left off, and brought up the trick of implementing most of the spending past the CBO’s 10-year window:

Democrats have maintained the strategy of delaying the major spending provisions until 2014 to create the appearance that the bill is cheaper over the CBO’s ten year budget window, from 2010 through 2019. In this version, the bill spends $17 billion in the first four years, while the remaining $923 billion, or 98 percent, is spent in the next six years. I’ve illustrated this tactic in the chart below. One thing to note is that the oft-quoted $940 billion number only pertains to the cost of expanding coverage — which is the bulk of spending in the bill — but it does not include all other costs, such as the providing more Medicare prescription drug subsides, which costs about $38 billion. I’ve used the $940 billion figure in the chart below, but have specified that it’s only the cost of the coverage provisions.

The Weekly Standard estimated the costs of Obamacare at 2 trillion.

There was more, but I’m sure you can see where this is going.

The Cato Institute’s Alan Reynolds goes so far as to as to slam the bill as an “anti-health” bill, and goes into detail on the some of the costs and taxes that will result:

* The “reconciliation bill” is not a “health bill” but an anti-health  bill.  It relies heavily on price controls, taxes and fines to punish doctors, hospitals and formerly innovative companies the produce prescription drugs and medical devices.  If we treated farmers, food companies and grocery stores the way Congress threatens to treat the health industries would anybody expect food to become better or cheaper?
* The 3.8% tax on both labor and investment income is not a “Medicare tax.”  It’s surtax on income that goes into the slush fund, not the Medicare trust.
* The bill could not possibly cost “only” $940 billion unless it contained a sunset provision — repealing the law after 2019.

In fact, new spending is negligible for four years.  At that point the government would start luring sixteen million more people into Medicaid’s leaky gravy train, and start handing out subsidies to families earning up to $88,000.  Spending then jumps from $54 billion in 2014 to $216 billion in 2019.   That’s just the beginning.

To be unduly optimistic (more so than the CBO), assume that the new entitlement schemes only increased by 7% a year.   At that rate spending would double every ten years — to $432 billion a year in 2029, $864 billion a year in 2039, and more than $1.72 trillion by 2049.  That $1.72 trillion is a conservative projection of extra spending in one year, not ten.  How could that possibly not add to future deficits?

Peter Suderman at Reason Magazine has a couple of pieces on Obamacare’s costs. In one, he challenges the plausibility of the two strongest claims of Obamacare: its affordability and deficit reduction.

The retail argument in favor of the bill was basically twofold: It provides affordable insurance coverage for 30 million, and it reduces the deficit, thereby making it fiscally sensible.

But CBO is clear: In conjunction with the upcoming doc fix—which was split off from the original bill and will be passed later—it doesn’t lower the deficit. And if Medicare savings are used to extend the solvency of the program, as Democrats frequently claim will happen, then that eats up the deficit reduction.

The coverage figure is the best argument for the bill; all indications are that it’s likely to result in health coverage for 30 million or more individuals. But the evidence that it will do so in an affordable manner is thin. The CBO estimates that the average premium cost will rise 10-13 percent (with a little more than half of folks receiving subsidies). And despite claims that the bill will put a stop to big rate increases, the evidence of the Massachusetts plan, which is very similar to Obamacare, suggests otherwise: Since the start of its plan, that state has seen double digit rate hikes, and expects more to come. And its average premium price is the highest in the nation. How can anyone possibly define this as “affordable”?

In the end, then, we’re left with a highly expensive, fiscally dangerous expansion of health insurance that locks even more people into a broken system. That’s an achievement, all right, but not a particularly good one.

Suderman’s other article completely dismantles the claim that Obamacare is deficit neutral and fiscally responsible:

A little more than 24 hours after releasing the reconciliation bill’s preliminary score—the one that picked up the majority of the headlines and votes—the CBO released another report, this one produced at the request of Rep. Paul Ryan (R-Wis.). It said that if in addition to the health care bill, the Democrats also pass legislation known as the “doc fix”—which would cost an additional $208 billion—the total effect would be to add $59 billion to the deficit over the first 10 years.

Defenders of the reform bill now argue that the doc fix is a separate issue. But Democrats didn’t always think so: Last summer’s first draft of the House health care bill included the doc fix. And Senate Majority Leader Harry Reid (D-Nev.) has reportedly used the provision to ensure support from the American Medical Association. Are we somehow supposed to believe that it’s good enough to bargain with but not good enough to figure into the budget?

Maybe the problem is something more elementary: Democrats just don’t know how to count. Hard to believe? The CBO’s letter also says that, contrary to administration claims, the bill won’t both reduce the deficit and extend the solvency of Medicare. One or the other, perhaps, but not both.

Nor is that the only double count. The score for the Senate bill includes $72 billion in revenues generated by the CLASS Act, a federally-backed disability insurance program. But that $72 billion is just premium revenue that will eventually have to be used to pay out benefits. The score counts that revenue anyway, despite the fact that, according to the CBO, it would likely add to the deficit in the long term.

Eventually, the deficit damage starts to add up. Toss out a few of the bill’s more fanciful assumptions—the implementation of the tax on so-called “Cadillac” insurance plans (already successfully delayed by a full five years by benefits-rich unions), cuts to Medicare payments, and a planned slowing of the growth of insurance subsidies—and the CBO reports that, two decades out, the deficit would spike “in a broad range around one-quarter percent of GDP”—something like $600 billion. Fiscally responsible!

One of the most extensive fact checks of Obamacare and its costs comes from Steve Foley at the Minority Report. Some of Foley’s high points (long, but worth looking at):

FACT CHECK: “Premiums Are Likely To Keep Going Up” Rep. Rob Andrews (D-NJ): “We heard someone say that the bill increases premiums for Americans…”

GOP Leader Response: If there’s one thing the American people want out of health care reform, it’s lower costs. The Democrats’ government takeover of health care actually increases premiums for millions of families.

By The Numbers:

  • $2,500 – That’s how much then-Sen. Barack Obama promised the cost of health insurance would decrease under his health care plan.
  • $2,100 – The amount by which premiums would increase for millions of families under the Senate-passed health care bill, according to CBO. (NOTE: CBO has confirmed that the reconciliation bill’s impact on premiums would be “quite similar” to the Senate bill.)

Key Quotes:

  • Associated Press: “Buyers, beware: President Barack Obama says his health care overhaul will lower premiums by double digits, but check the fine print. Premiums are likely to keep going up even if the health care bill passes, experts say. If cost controls work as advertised, annual increases would level off with time. But don’t look for a rollback.” (3/17/10)
  • Pew: “Regardless, Most See Their Health Costs Rising. About half of Americans (51%) say that if the health care bills in Congress become law, they expect their own health care costs would go up in coming years; nearly a third (32%) say their health costs would go up a lot. Fewer than one-in-five (17%) say their health costs would go down if the legislation passes, while 22% say they expect their costs would stay the same.” (3/18/10)
  • Politifact: “The vast majority of people will not see significant declines in premiums. When President Barack Obama talks about premiums going down, he usually means they won’t go up as much as they would otherwise. … People who buy insurance on their own but don’t qualify for government subsidies could see premiums rise by as much as 13 percent.” (St. Petersburg Times, 3/19/10)

Better Solutions:

The Republican health care bill lowers premiums for families and small businesses by up to 10 percent, according to the non-partisan Congressional Budget Office. Our bill achieves this relief without cutting Medicare or raising taxes by implementing smart, common-sense reforms, including:

  • Letting families and businesses buy health insurance across state lines;
  • Allowing individuals, small businesses, and trade associations to pool together and acquire health insurance at lower prices, the same way large corporations and labor unions do today;
  • Giving states the tools to create their own innovative reforms that lower health care costs; and

· Ending junk lawsuits that contribute to higher health care costs.

[...]

FACT CHECK: “Illusions of Cost-Control”

Rep. Frank Pallone (D-NJ): “Democrats today have proposed a bill that will lower health care costs…”

GOP Leader Response: Rather than slowing the trend of rising health care costs, the Democrats’ government takeover of health care makes things worse – by hundreds of billions of dollars.

By The Numbers:

  • $390 billion – The amount by which taxpayers’ commitment to health care would increase between 2010 and 2019 under the Democrats’ reconciliation bill, according to the non-partisan Congressional Budget Office.
  • $222 billion – The amount by which national health care costs will rise between 2010 and 2019 under the Senate health care bill, according to the Obama Administration’s actuaries at the Center for Medicare and Medicaid Services (CMS). (NOTE: CMS has informed the Congress that it cannot issue an estimate of the reconciliation bill before today’s vote, so House Democrats will for a government takeover of health care without knowing its true impact on the federal budget.)

Key Quotes:

  • “Obama’s illusions of cost-control. When people get insurance, they use more health services. Spending rises. By the government’s latest forecast, health spending goes from 17 percent of the economy in 2009 to 19 percent in 2019. Health ‘reform’ would probably increase that.” (Robert J. Samuelson, Washington Post column, 3/15/10)
  • Politifact: “But in attempting to simplify the issue, saying that the plan would reduce the cost of health care, we think Obama sacrifices some accuracy.” (12/18/09)

Better Solutions:

The Republican health care bill controls health care costs by implementing smart, common-sense reforms without implementing a massive government takeover. Families and small businesses will see their premiums reduced under the GOP plan by up to 10 percent, according to the non-partisan Congressional Budget Office.

FACT CHECK: “Healthcare Bill Would Add Billions To The Country’s Debt”

Rep. Eliot Engel (D-NY): “We save money, it’s CBO scored. Everybody wins with this bill…”

GOP Leader Response: The Democrats’ government takeover of health care actually increases the deficit and piles more debt on our kids and grandkids.

By The Numbers:

  • 0 – The amount by which Democrats’ government takeover of health care reduces the deficit without budget gimmicks.
  • $260 billion – That’s the amount by which Democrats’ government takeover of health care will most likely increase federal deficits over the next 10 years, according to a CBO analysis. The CBO analysis shows that deficits will increase by at least $59 billion under the Democrats’ bill. (NOTE: These charts put together by Budget Committee Republican Paul Ryan expose the true cost of Democrats’ health care bill.)
  • $1.2 trillion – The total cost of the bill between 2010 and 2020, including $940 billion in coverage subsidies, $144.2 billion in additional mandatory spending, $70 billion in discretionary spending in the Senate bill, and $41.6 billion in unrelated education spending.
  • 10 – Number of years of tax hikes to pay for six years of spending.
  • $1.55 trillion – The projected FY 2010 deficit; 11 times the ten year “savings” Democrats claim the bill will produce by spending more than $1 trillion for this government takeover of health care.

Key Quotes:

  • CBO: “Healthcare Bill Would Add Billions To The Country’s Debt.” “The Congressional Budget Office (CBO) said the healthcare bill would add billions to the country’s debt if lawmakers ignore the bill’s cost constraints, as Rep. Paul Ryan (R-Wis.) expects them to do. Under the scenario painted by Ryan, CBO said the healthcare bill’s $138 billion in savings over 10 years would disappear because the government would: extend the current Medicare doctor payment rate instead of allowing it to expire; allow health insurance subsidies to grow at a sustained rate; and fail to implement a tax on high-cost health plans and an independent Medicare advisory board, two measures aimed at constraining federal health costs.” (The Hill, 3/19/10)
  • Politifact: “In fact, the CBO has said a year-by-year projection of the bill’s budget effect beyond the first 10 years would ‘not be meaningful because the uncertainties involved are simply too great.’ It’s natural to want to translate the CBO’s GDP projection into actual dollars (Who can get their head around a half a percent of GDP 10 to 20 years from now?). And the GDP projections used to extrapolate the $1.2 trillion figure may be perfectly reasonable, if highly speculative.” (3/18/10)

Better Solutions:

The Republican health care bill reduces the deficit by implementing smart, common-sense reforms with no accounting gimmicks attached. Families and small businesses will see their premiums reduced under the GOP plan by up to 10 percent, according to the non-partisan Congressional Budget Office.

FACT CHECK: Burdensome Mandates, Higher Taxes = Proven Job Killers

Rep. Mark Schauer (D-MI): “I stand for small businesses who plead for help to put an end to double-digit premium increases that make them choose between jobs and health care. … All of these things will end with the passage of this bill.”

GOP Leader Response: At a time of nearly 10 percent unemployment, Democrats’ government takeover of health care will worsen the jobs picture. It includes tens of billions in new taxes on employers and investments – proven job killers – and it creates incentives to cut payrolls and drop coverage rather than pay huge sums in new taxes and penalties. The last thing we need right now are massive tax hikes that will make it harder to save, invest, and hire.

By The Numbers

  • $569.2 billion – Tax increases in the legislation, including $48.9 billion in new tax increases in the reconciliation bill alone.
  • 16,500 – This bill is a jobs bill for the tax collector. The estimated number of IRS auditors, agents and other employees that may be needed to collect the hundreds of billions in new taxes levied on the American people.
  • 166% – That’s how much bigger the employer mandate tax is in this bill – from $750 per employee in the Senate bill to $2,000 per employee in the reconciliation bill.
  • $25 billion – How much more tax revenue the bill gets from American businesses as a result of nearly tripling the employer mandate tax.
  • 219,961 – Number of small businesses which could be subject to the employer mandate.
  • 44 – The percentage of all small business employees employed by small businesses which could be subject to the employer mandate; that’s 26.4 million workers and 22 percent of the entire private-sector workforce.
  • $982 billion – Total amount of wages paid to employees working at small businesses which could be subject to the employer mandate and associated taxes.
  • $52 billion – The total amount of new taxes employers will pay because of the employer mandate taxes.
  • $17 billion – Amount Americans will fork over to the IRS as a result of the individual mandate tax in the bill – a full $2 billion more than the Senate bill because of changes made in the reconciliation bill.
  • 14 cents – The amount per day which the reconciliation bill reduces the individual mandate tax. $695 per year is the new amount of the tax.
  • 23.8% – The new top capital gains tax rate under this bill, a 60% increase from current law.
  • 43.4% – The new top tax rate for dividends under this bill, a 190% increase from current law.

Key Quotes

  • More than 130 economists tell President Obama that massive government takeover of health care is a job-killer: “In our view, the health care bill contains a number of provisions that will eliminate jobs, reduce hours and wages, and limit future job creation. … The new and higher taxes on America’s small businesses and workers included in the bill are detrimental to job creation and economic growth, especially now given the fragile state of the economy.” (Letter, 3/18/10)

Better Solutions

The Republican health care bill protects American jobs by implementing smart, common-sense reforms without imposing a massive government takeover. Families and small businesses will see their premiums reduced under the GOP plan by up to 10 percent, according to the non-partisan Congressional Budget Office.

And that’s not all of it; read the rest here.

This bill is not what it was advertised as. It will run up the deficit, increase medical costs and insurance premiums, and will slow down the economy and cost jobs. And these facts have been manipulated and avoided by the Democrats to keep the American people from finding out what this bill will really do.

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  1. The Obamacare Abomination: Backlash « The Republican Heretic
  2. The Obamacare Abomination: Reactions « The Republican Heretic

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