CBO Dishes More Bad News on Health Care Bill

CBO Dishes More Bad News on Health Care Bill

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Douglas Elmendorf,  Director of the Congressional Budget Office, delivered a presentation a few days ago at the University of Southern California. His address, which provides an up-to-date review of Obamacare, did not, in this raucous pre-election week, receive much attention. That was probably good news for Democrats who voted for the bill and who are scurrying to defend their support of the unpopular measure. Elmendorf made the following points;

  • The health care bill will reduce the amount of labor used in the economy by roughly half a percent, mainly by reducing the incentive to work. The expansion of Medicaid and provision of subsidies will mean fewer Americans will have to find jobs. (Why earn a living if your necessities are free?)

  • Total spending on health care today amounts to about 15 percent of GDP; the CBO projects it will make up more than 25 percent by 2035. (Remember how we needed legislation to prevent health care becoming an ever-larger portion of the economy?)

  • “Gaining insurance coverage will increase an individual’s demand for health care by about 40 percent.” (So much for efficiencies. There is no semblance of rational cost-benefit analysis in the current scheme; there will be even less in the future for those who have access to free services.)

  • The bill will only marginally eliminate unnecessary health care spending. One reason for skepticism on this front is that significant savings will come only from “fundamental changes’ in the organization and delivery of health care. Though Elmendorf says consensus exists on what needs to be done, the bill fails to embrace needed measures.

  • The likely effect from the excise tax on employer-based policies will be that employees will pay more for their policies and for services, and consequently get reduced health care. (This is already happening, even though the excise tax doesn’t kick in until 2018.)

  • Medicare outlays will grow more slowly in the future, but it is unclear whether the drop in growth will stem from greater efficiencies or “reductions in access or quality” of the care provided. The bill included “important limitations in the experimentation that will occur” – experiments that are important to revising how Medicare works. As a result, the CBO “projects limited savings from the experiments in delivery and payment systems during the next decade.” (Medicare, in short, remains a waste-plagued inefficient enterprise.)

It’s no wonder voter concerns about the health care bill are second only to the economy, according to a recent CBS News poll. We will be spending a great deal more on health care for those tens of millions that are currently uninsured today, while folks who do have insurance today – the majority of the country – can expect reduced benefits and care. Further, it is highly unlikely that the government is going to be able to rein in the wasteful and dysfunctional Medicare system that was promised to be a significant source of funding for our universal health care program. None of this is especially surprising, except that it is the view of that very body that managed to issue a barely positive fiscal endorsement of the bill under heavy White house lobbying. An endorsement that curiously came just in the nick of time, helping the Obama administration collect crucial votes.

Is it any wonder that candidates across the country are running against this unpopular legislation?

After more than two decades on Wall Street as a top-ranked research analyst, Liz Peek became a columnist and political analyst. Aside from The Fiscal Times, she writes for FoxNews.com, The New York Sun and Women on the Web.