Monday, June 15, 2009

Scoring the Kennedy plan = $1 trillion and climbing

The CBO has come out with a partial scoring of the Democratic plan put forth by Senator Kennedy. It is an incomplete analysis because the whole of the bill hasn't been released yet. Even so, with this preliminary scoring, they're seeing it adding about a trillion dollars to the deficit. Expect that number to climb and climb as the bill goes through the legislative process.
According to our preliminary assessment, enacting the proposal would result in a net increase in federal budget deficits of about $1.0 trillion over the 2010-2019 period. When fully implemented, about 39 million individuals would obtain coverage through the new insurance exchanges. At the same time, the number of people who had coverage through an employer would decline by about 15 million (or roughly 10 percent), and coverage from other sources would fall by about 8 million, so the net decrease in the number of people uninsured would be about 16 million or 17 million.

These new figures do not represent a formal or complete cost estimate for the draft legislation, for several reasons. The estimates provided do not address the entire bill—only the major provisions related to health insurance coverage. Some details have not been estimated yet, and the draft legislation has not been fully reviewed. Also, because expanded eligibility for the Medicaid program may be added at a later date, those figures are not likely to represent the impact that more comprehensive proposals—which might include a significant expansion of Medicaid or other options for subsidizing coverage for those with income below 150 percent of the federal poverty level—would have both on the federal budget and on the extent of insurance coverage.
And, as Marc Ambinder points out, all this money would be spent and still only decrease the numbers of the uninsured by about 16 million.
The good news: 39 million people would obtain health insurance coverage through the new health insurance gateways. But the plan, according to the CBO, would result in only a net gain of 16 million Americans adding insurance. That's because the CBO believes that the plan would kick about 15 million people out of the system because their employers would no longer offer insurance, and coverage from other sources would decline by 8 million.
Of course, that's buying what has become a conventional analysis of how many people are uninsured and who exactly these people are. We see the number of around 40-48 million uninsured being touted by those advocating a public option. However, that figure includes about 12 million people who are eligible for government aid and just haven't signed up for it. Some other facts you might not be familiar with: about half that number are people ages 18-34 who just have decided not to buy health insurance because health care is not a priority for them. About 9 million are people who can afford health insurance and have chosen not to buy it. And about a third of those uninsured are just temporarily uninsured as they move between jobs although that number will have increased during the recession. And about 15% of that number are illegal immigrants. So once you offer a more complete analysis of the number uninsured, you have about 10-12 million who are chronically uninsured. If our legislators looked at these numbers more honestly and thoroughly, they could devise a plan to help those people rather than overhauling the entire system and incurring such a massive cost. And now we learn that the Democratic Senate plan will add cost over a trillion dollars and still not address the problem of covering the uninsured.

And the CBO report dispels the notion that a public option wouldn't send people who have employer-provided insurance wouldn't be affected by the Democrats' plan. So when you hear the President say that anyone who likes their own insurance plan would be able to keep it, don't believe him. As Scott Harrington, a professor from the University of Pennsylvania writes today,
The simple truth is that equal competition between a government health-insurance plan and private plans would be impossible. An ostensibly competing public plan would make a single-payer system inevitable. Health-care providers and other Americans should recognize this reality and be prepared for the consequences.
And once that happens, expect the cost of that plan to soar well beyond the one trillion that the CBO is counting up.