2009 July 19 Sunday
Obama Health Care Financing Problem Looking Bigger

The Obama administration claims their universal medical insurance proposal won't bankrupt the country because assorted cuts will come later.

President Obama's budget director on Sunday described a House bill on health care reform as "deficit neutral" even though it includes Medicare payments to doctors that would put the bill $240 billion in the hole over a decade.

Office of Management and Budget Director Peter Orszag insisted that Obama won't sign any health care reform that isn't paid for, but also said the legislation doesn't take into account savings that will be achieved in other bills to come.

But the pattern of medical spending programs from the US government is that they end up costing far more than originally projected. You've got to start out with a break-even original proposal because going forward reality will only be worse. The recent Massachusetts expansion of health care coverage provides yet another example of a program that costs more than originally projected.

It will not save money. In fact, according to CBO director Douglas Elmendorf, it will "significantly expand the federal responsibility for health-care costs," exacerbating rather curing the dire, health-care driven budget problems we already face. As Ron Bailey pointed out earlier today, this is the result when you use official government cost estimates. And as the Massachusetts experiment with universal coverage taught us, the true cost of any universal-coverage oriented health-care overhaul is likely to be far higher than projected.

It will likely shift people away from their current health-insurance plans. Depending on the final details surrounding the proposed public plan, some people will almost certainly end up moved
away from their current plans. At a bare minimum, Obama's promise that individuals will be able to keep their current health-insurance is misleading.

It will raise taxes.

Governors of both political parties oppose Obamacare because it will foist still more unfunded medical spending mandates on them.

The role of the states in a restructured health care system dominated the summer meeting of the National Governors Association here this weekend with bipartisan animosity voiced against the plan during a closed-door luncheon on Saturday and in a private meeting on Sunday with the health and human services secretary, Kathleen Sebelius.

Read that full article. The states have huge deficits and they can't afford a huge expansion in Medicaid that the bills in Congress would force upon them.

Why the numbers will be even worse than projected: The US economy is going to grow slowly for the next 10 years if it even grows at all. The US government assumes rising tax revenues based on excessively optimistic economic growth projections. But the recent financial crisis, demographic trends, and Peak Oil will lower long term growth if long term growth even happens at all.

Share |      By Randall Parker at 2009 July 19 10:20 PM  Economics Health

gcochran said at July 20, 2009 12:27 AM:

I will work harder.

zylonet said at July 20, 2009 7:29 AM:

The biggest illustration of this healthcare debacle is that few people ask the most salient question: Is the plan Constitutional.

The nation has devolved into light thuggary. The Dems feel that once they are in charge, they can do as the please; vice versa for the Republicans. Few today ask if the actions are Constitutional. Instead all politicians, press and the vast majority of Americans believe in rule by fiat. Few care if the action is legal; what matters is power. I suppose this is the natural devolution from mass immigration, inflationary monetary policy and empire building: the complete destruction of a social cohesion.

The degree to which the Constitution is ignored is shocking and is omnipresent. My wife and I were watching "W" the movie yesterday and it was obvious that Oliver Stone fails to understand the notion of the Constitution. As he pulled no punches in attacking Bush and showing him to be a buffoon in various meetings, one thing was completely missing (unless it happened when I got up). At no point did the dialogue debate whether the war would be Constitutional; this is a major oversight since it would clearly cast Bush in the most negative light possible to a civil man. I believe this probably results from Stone's own ultr-liberal positions and mindset of ruling by force. Similar examples are found every day on the nightly news. We are nothing but a nation of idiots trading on goodwill and indebting our future generations.


Reaganite Republican said at July 21, 2009 3:12 PM:

Barack Obama will never say to your face what he actually plans to do -or achieve- with these huge new government programs.

Rather, you get some specious auditory performance with styrofoam props to wow the plebes, like the tacky greek columns in Denver. To him, the revolutionary ends justify the Alinskyite means- so the Dear Leader just tells you whatever he needs to.

And the truth is that Obama is out to nationalize health care.. they'll be no private insurance industry left after five years of Obamacare... but of course he's lying about it.

As for the American public, the reality that Obama is not up to the job seems to finally be setting-in; the poll numbers are now headed steadily south- is he already facing his Waterloo on this legislation?


not anon or anonymous said at July 22, 2009 8:06 AM:

Reaganite Republican: // Barack Obama will never say to your face what he actually plans to do -or achieve- with these huge new government programs. //

People keep saying that, but I think they're being absolutely nothing less than useful idiots. What does "spread the wealth" and "never let a good crisis go to waste" mean to you? Everything the Communist-in-Chief has said has been stronger than what I remember either Clinton promising at any time before this regime.

I honestly don't understand. Are you classical-liberals so afraid of being called racist that you won't even quote this guy, just moan like the British about the sad state of European Social Democracy?

not anon or anonymous said at July 22, 2009 9:49 PM:

I can't resist: here's some from the transcript:

The question was: "Do you think -- do you accept the premise that other than some tax increases on the wealthiest Americans, the American people are going to have to give anything up in order for this to happen?"

The president answered: "They're going to have to give up paying for things that don't make them healthier. And I -- speaking as an American, I think that's the kind of change you want."

Yes, totalitarianism is certainly the "change you want".

But having a public plan out there that also shows that maybe if you take some of the profit motive out, maybe if you are reducing some of the administrative costs, that you can get an even better deal, that's going to incentivize the private sector to do even better. And that's a good thing. That's a good thing.

Socialism is more efficient than the market. See the trains? They run on time.

Right now, doctors a lot of times are forced to make decisions based on the fee payment schedule that's out there. So if they're looking and you come in and you've got a bad sore throat or your child has a bad sore throat or has repeated sore throats, the doctor may look at the reimbursement system and say to himself, "You know what? I make a lot more money if I take this kid's tonsils out."

See, that government regulation of medicine, that's just causing doctors to perform unnecessary surgery on your children for profit. What we need is more regulation. Think of the children.

This debate is not a game for these Americans, and they can't afford to wait any longer for reform. They're counting on us to get this done. They're looking to us for leadership. And we can't let them down.


joseph schwab said at November 5, 2009 3:18 PM:

I just can't remember any federal run businesses that didn't cost the taxpayers.The federal government is a growing giant. out of control.STOP SPENDING WHAT IS NOT YOURS TO BEGIN WITH.

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