Reid’s fuzzy math

New York Post, November 19, 2009
New York Post, November 20, 2009*
Real Clear Politics, November 20, 2009

‘Reform’ bill’s true cost is twice advertised price

Senate Majority Leader Harry Reid is touting the Senate’s newest health-care bill as costing $849 billion over 10 years. But this uses the same accounting trick as past versions: 99 percent of the costs don’t kick in until the fifth year of that “10 year” period. And the true 10-year costs are well over twice what Reid’s advertising: $1.8 trillion.

The Democrats cite the bills’ projected costs from 2010-19. Yet, as the Congressional Budget Office reports, the bill would cost just $9 billion total from 2010 through 2013 — versus $147 billion in 2016 alone. In the first 40 percent of what the Democrats are calling the bill’s “first 10 years,” only 1 percent of its costs would yet have hit.

As the CBO analysis indicates, the bill’s real 10-year costs would start in 2014. And in its true first decade (2014 to 2023), CBO projects the bill’s costs to be $1.8 trillion — double the price Reid is advertising.

And that’s even though the CBO optimistically assumes the government-run “public option” wouldn’t cost a cent.

Over this same 10-year span, the 2,074-page bill would hike taxes and fines on Americans by $892 billion — more than the alleged price of the bill.

Just as problematic are the bill’s effects on entitlement spending and deficits.

Medicare is already teetering on the edge of insolvency. This year’s Medicare Trustees Report (signed by Health and Human Services Secretary Kathleen Sebelius, among others) warns that the Medicare Hospital Trust Fund — the main funding channel for the largest part of Medicare — will become insolvent in 2017.

Worse, nearly four people are now paying into Medicare for every beneficiary — but, with the baby boomers’ retirement fast approaching, that number will drop over the next 20 years to about 2½. Fewer and fewer people will be paying higher and higher costs.

Yet, as CBO notes, in its real first decade, the Senate bill would siphon $802 billion out of Medicare to spend elsewhere. With its financial outlook already beyond bleak, Medicare is the last place to look to for “free” money.

Among the $802 billion that Reid would divert from Medicare is $431 billion in cuts in doctors’ pay (far more than the misleading figure for 2010-19). The bill says it would cut payments to doctors for services to Medicare patients by 23 percent in 2011 — and never raise them back up, ever.

No one who’s been in Washington for more than five minutes actually expects this reduction to occur — and if it doesn’t, then the Senate health bill would increase our deficits by $286 billion in its true first decade, according to CBO projections.

In his historic speech to Congress on Sept. 9, President Obama pledged not to support any health bill “if it adds one dime to the deficit, now or in the future, period.” This bill would raise the deficit by 2.86 trillion dimes — and yet the president is its most visible and audible supporter.

According to The Washington Post, the president has also stated “flatly that he won’t accept a bill that doesn’t ‘bend the curve’ on rising health-care costs.” Yet nothing in the CBO analysis suggests that the Senate bill would bend the cost-curve downward.

Meanwhile, the Office of the Chief Actuary at the Centers for Medicare and Medicaid Services has just concluded that the House health bill — which the President also champions — would bend the curve upward, raising nationwide health-care costs by over half a trillion dollars by 2020 (and by $289 billion even in the unlikely event that doctors’ pay is actually slashed).

If Congress is to consider legislation to remake a sixth of the US economy and insert the government into the health-care decisions of every American, it should at least be honest about the costs. In its first 10 years of actually being in effect in any meaningful way, Sen. Reid’s bill would cost $1.8 trillion. And it’s a simple fact that every penny of that would have to be paid by the American people through some combination of three things: cuts to existing programs, higher deficits, and higher taxes.

* This article was titled “Another set of cooked books.”

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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