CBO Score – 18 Million Still Uninsured After Spending Over $1 Trillion

WILLIAM A. JACOBSON OCT 30, 2009 2:57 AM

The Congressional Budget Office has released its “scoring” of the House health care restructuring bill. The CBO is required to score bills the way they are drafted, even if the assumptions in the legislation are unrealistic or politically unlikely to be fully implemented. Accordingly, the CBO score is the best case scenario.

Here are the highlights (all time periods are through 2019, unless otherwise noted):

• The scoring “does not constitute a final and comprehensive cost estimate for the bill.” (page 1)
• There are $426 billion of cost cuts to Medicare, Medicaid and other federal health programs, and $572 of tax increase revenues projected. (pages 2, 6)
• The costs of the insurance subsidies will be $894 billion after taking into account certain assumed revenue offsets. (page 3)
• State spending on Medicaid will increase on net by about $34 billion. (page 4)
• 18 million non-elderly people will remain uninsured, with the percentage of coverage rising from 83% to 96%. (page 5)
• 15 million more people will be on Medicaid. (page 6)
• 6 million people will join the public plan option, which will charge higher rates than private insurance, due to less management of utilization by patients and an unhealthier pool of patients (page 6)
• It will cost between $5 and $10 billion for the IRS to implement “the eligibility determination, documentation, and verification processes for subsidies.” These costs are not factored into the overall estimates. (page 9)
• The deficit will be reduced by $9 billion in 2019. (page 12)
• The “bill would put into effect (or leave in effect) a number of procedures [such as leaving physician payment cuts in place] that might be difficult to maintain over a long period of time” and which, if not followed, would require a change in the projections. “The long-term budgetary impact of H.R. 3962 could be quite different if those provisions generating savings were ultimately changed or not fully implemented.” (page 14)

Now what this means. First, the cost saving assumptions built into the bill are unrealistic and unable to be sustained rendering this scoring meaningless as to future budget deficits. This is a financial shell game, but the drafters of the legislation, not the CBO, are to blame.

Second, the real costs is $1.055 trillion, not the $894 billion Democrats are touting. As explained by the NY Times analysis:

But a closer look at the budget office report suggests that the number everyone should have reported was $1.055 trillion – which is the gross cost of the insurance coverage provisions in the bill before taking account of certain new revenues, including penalties by individuals and employers who fail to meet new insurance requirements in the bill.

Third, there still will be 18 million uninsured, and of the 36 million newly insured people, 15 million will have been added to Medicaid. The CBO did not estimate how many of these newly insured people currently are eligible for federal programs but have not enrolled. The bill reflects a massive increase in Medicaid dependents, and only 21 million people gaining insurance through some other means.

Fourth, the public option will not provide lower cost coverage.

In sum, we create massive new federal bureaucracies and regulations, get IRS intrusion into health care, 15 million more people become Medicaid dependents, and we still have 18 million uninsured, and all this after spending over $1 trillion (best case scenario).

Assuming this best case scenario comes true based upon these unrealistic cost assumptions, we will have achieved very little relative to the costs. And we will have done severe damage to our health care system, something the CBO cannot score because it cannot be expressed in dollars.

Instead of getting something for nothing as promised by the politicians, we will get nothing for something.

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