|SITREP - March 18 2012|
In about a week, the United States Supreme Court is set to begin consideration of the President’s healthcare reform law.
As it would happen, the non-partisan Congressional Budget Office is also in the process of conducting its own review. This past week, they released two reports. One dealt with, among other things, the expected medium and long term costs for the new healthcare policy. The second dealt with the effects of the President’s law on existing healthcare coverage for individuals and families.
First, the cost piece:
CBO found that the initial projected cost of Obamacare was a bit off… It’s actually going to cost double. The initial cost was billed at $940 billion over ten years. CBO now predicts the actual cost over ten years will be closer to $1.76 trillion. How did this happen? Accounting gimmicks for one.
What do I mean by that? First, consider the basic “pay for” scheme. For accounting purposes, ten years of estimated tax revenue were used to cover six years of actual program spending.
Why do that? The CBO estimates the net cost of all policy proposals in ten year windows starting in the current year. By setting up the scheme the way the administration did, they could make it look “budget neutral” by starting the taxes years before the started the spending portion of the program.
This is why the cost estimate is going up so much: When Obamacare was signed into law, CBO’s ten-year budget window went from 2010 to 2020. Now, two years later, the budget window goes from 2012 to 2022. As a result, we’re starting to get a picture of the true ten-year cost – not the gimmick cost used to make the proposal look smaller than it really was. We now have eight years of spending in the budget window instead of the initial six. Next year we’ll have nine years of spending instead of the initial six. And finally in 2014, you’ll get the official government estimate of the full ten year cost of Obama’s program.
As Nancy Pelosi once infamously said, you have to pass the bill to find out what’s in it. It seems like in this case, you have to fully implement the law to get the true estimate of what it’s going to cost.
Those schemes might pass the CBO, but they don’t pass the sniff test.
It wasn’t just the tax revenue versus spending that they gamed with. The overall Obamacare proposal also included some funny money programs like a long-term care insurance that the administration knew full well would never be practical to implement. Even though they never actually planned to implement the policy, they got the CBO to count the “expected” premium revenue as paying for the overall cost of the bill.
The scheme was simple: count the revenues that will come in during the ten-year budget window for benefits that wouldn’t be paid out until after the ten-year window… voila… extra revenue to pay for your legislation. The Obama administration has readily admitted that the long term care insurance part of their law isn’t workable and they have said publicly that they won’t even try to implement it.
They still want to keep in on the books though. This doesn’t make any sense.
Next week, I’m going to lead the House debate on legislation that would reform the medical malpractice policies that are driving up healthcare costs for everybody. Needless to say, the President’s law skipped over this obvious piece.
The bill I’m leading the debate on will also repeal the Independent Payment Advisory Board (IPAB) – otherwise known as the unelected bunch of bureaucrats who are going to be given the authority to decide which procedures and treatments you’ll be allowed under the government healthcare plan when it take effect in 2014.
There is a good deal of bipartisan consensus on both of these issues, so hold your breath and let’s hope Congress can work together again. The House passed the JOBS Act a couple weeks ago with almost four hundred votes and it looks like we might be on a roll.