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The healthcare bill will cover 32 million more people and reduce future deficits. With 2,700 pages of rules, regulations, payoffs, corporate handouts, and outright bribes, the law of unintended consequences will work its wonders in the coming decades. Would you encourage your bright student son or daughter to become a doctor? How many older doctors will throw in the towel and retire? Why try to make more than $250,000 when it will all be taken by the Federal government? Why would a small business with 49 employees expand beyond that many employees if the Federal government will come down on them like a ton of bricks?Do you really think this bill will cut costs and future deficits? Really? The Democrats crow about the historic passage as being on par with the great programs of Medicare & Medicaid. Please read the FACTS below regarding what Congress said they would cost versus what they actually did cost.If you are stupid enough to think there is a free lunch, then believe this bill will reduce costs. Just like the $787 billion job stimulus bill would create 3.5 million jobs. Remember that one?

Medicare (hospital insurance). In 1965, as Congress considered legislation to establish a national Medicare program, the House Ways and Means Committee estimated that the hospital insurance portion of the program, Part A, would cost about $9 billion annually by 1990.v Actual Part A spending in 1990 was $67 billion. The actuary who provided the original cost estimates acknowledged in 1994 that, even after conservatively discounting for the unexpectedly high inflation rates of the early ‘70s and other factors, “the actual [Part A] experience was 165% higher than the estimate.”

Medicare (entire program). In 1967, the House Ways and Means Committee predicted that the new Medicare program, launched the previous year, would cost about $12 billion in 1990. Actual Medicare spending in 1990 was $110 billion—off by nearly a factor of 10.

Medicaid DSH program. In 1987, Congress estimated that Medicaid’s disproportionate share hospital (DSH) payments—which states use to provide relief to hospitals that serve especially large numbers of Medicaid and uninsured patients—would cost less than $1 billion in 1992. The actual cost that year was a staggering $17 billion. Among other things, federal lawmakers had failed to detect loopholes in the legislation that enabled states to draw significantly more money from the federal treasury than they would otherwise have been entitled to claim under the program’s traditional 50-50 funding scheme.

Medicare home care benefit. When Congress debated changes to Medicare’s home care benefit in 1988, the projected 1993 cost of the benefit was $4 billion. The actual 1993 cost was more than twice that amount, $10 billion.

Medicare catastrophic coverage benefit. In 1988, Congress added a catastrophic coverage benefit to Medicare, to take effect in 1990. In July 1989, the Congressional Budget Office (CBO) doubled its cost estimate for the program, for the four-year period 1990-1993, from $5.7 billion to $11.8 billion. CBO explained that it had received newer data showing it had significantly under-estimated prescription drug cost growth, and it warned Congress that even this revised estimate might be too low. This was a principal reason Congress repealed the program before it could take effect.

SCHIP. In 1997, Congress established the State Children’s Health Insurance Program as a capped grant program to states, and appropriated $40 billion to be doled out to states over 10 years at a rate of roughly $5 billion per year, once implemented. In each year, some states exceeded their allotments, requiring shifts of funds from other states that had not done so. By 2006, unspent reserves from prior years were nearly exhausted. To avert mass disenrollments, Congress decided to appropriate an additional $283 million in FY 2006 and an additional $650 million in FY 2007.



It’s NOT a Health Bill, NOT a Medicare Tax and It Can’t Possibly Cost Only $940 Billion

Posted by Alan Reynolds

  • 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?

Could anyone really imagine that the bill’s new taxes and fines could possibly grow by 7% a year?   On the contrary, most of the claimed revenues are either a timing fraud (such as treating $70 billion for long-term care premiums as newly found treasure) or self-defeating.

The hypothetical tax on Cadillac plans (suspiciously postponed until 2018), for example,  is designed to discourage such plans from being offered by employers or wanted by employees — that is, it’s designed to yield less and less over time.

Moreover, the accumulating penalties on reporting joint incomes above $250,000 — a 39.6% tax, a 3.8 % income surtax, a 0.9% Medicare surtax, rapid phasing-out of deductions and exemptions — would greatly discourage any activity that would push income above $250,000.   Most obviously, no sensible family whose income is normally below that pain threshold would be so foolish as to sell enough assets to let capital gains to push them over the line.

(If even half of the punitive tax plans are enacted, I plan to launch a “249 Club” whose members pledge to never again report more than $249,000).

ObamaCare’s Actual Price Tag

Posted by Michael F. Cannon

My oped at explains just how well Democrats have hidden the full cost of the Obama health plan:

To hear Democrats tell it, the CBO projects the legislation would cost a mere $940 billion over the next 10 years….the actual cost of the bill is nearly $3 trillion….

Yet this legislation would set in motion political forces that would make additional spending inevitable. It would create new constituencies for government spending, hook existing constituencies on even more government spending, and promise implausible cuts in existing subsidies to constituencies that are highly organized and vocal…

When Congress inevitably fails to implement the Obama plan’s spending cuts, and expands its subsidies to more and more people, the cost of this legislation will grow beyond $3 trillion.

The CBO did an admirable job of projecting the cost of this legislation as written. But the text of the legislation does not reflect the reality it would create.

Giving the Obama health plan the effect of law will not make those costs disappear.