Wednesday, May 12, 2010

Those phony projections of the cost of Obamacare are already out of date

Wow, Obamacare has barely become law and already the CBO has increased its estimate of how much it will cost.
Congressional Budget Office estimates released Tuesday predict the health care overhaul will likely cost about $115 billion more in discretionary spending over ten years than the original cost projections.

The additional spending — if approved over the years by Congress — would bring the total estimated cost of the overhaul to over $1 trillion.
Remember, the CBO had to buy into the phony assumptions that the Democrats placed into their bill such as future congresses making all sorts of cuts in Medicare that we know they won't make or raising taxes on the so-called Cadillac plans in 2018 that is doubtful that it will get passed.
The CBO released the estimates in response to a request from California Rep. Jerry Lewis, ranking Republican on the House Appropriations Committee. A spokeswoman for Lewis said the inquiry was filed before the House voted on the bill.

“[L]arge sums of discretionary spending in both the House and Senate versions of the health care reform bills have not yet been included in estimates by the CBO, rendering it impossible to make informed decisions regarding the outcome of this legislation,” Lewis wrote in a February letter to House Speaker Nancy Pelosi, asking her to postpone votes until the discretionary spending analysis was complete.

The CBO estimated in March that the gross cost of the overhaul would be $940 billion over 10 years. The net cost was estimated at $788 billion over 10 years. But the group cautioned that it couldn’t make an estimate of the discretionary costs without more time and information.
Yeah, the Democrats didn't need to wait for no stinkin' final estimate; they had a bill to pass! Who cares how much it costs?

And, of course, the CBO isn't figuring in such realities as what will happen if lots of young people decide to pay the penalty rather than buying health insurance. Or if companies like AT&T or Verizon decide that they'd save more money by dumping their employees into buying plans through the public exchanges that will be set up instead of providing health insurance for them.

As Allahpundit writes,
Because it’s discretionary spending, Congress could theoretically decide to cut it. Ahem. Just bear in mind that the vaunted “savings” from O-Care per the CBO score before the bill was voted on was $138 billion. Practically all of that is gone now, and when you incorporate the larger-than-expected cost of “doctor fix,” it looks like we’re actually into the red by the Democrats’ own accounting standards. Who could have seen that coming, except everyone?
Yup, anyone could have predicted this would happen. After all what happened to previous projections of other health care programs? Oh, yes. Spending on them has way outrun original projections.
But cost projections are notoriously unreliable, and history is filled with examples of federal programs - especially in health care - that cost far more than originally predicted.

In 1965, the House Ways and Means Committee estimated that the hospital insurance program of Medicare - the federal health care program for the elderly and disabled - would cost $9 billion by 1990. The actual cost that year was $67 billion.

In 1967, the House Ways and Means Committee said the entire Medicare program would cost $12 billion in 1990. The actual cost in 1990 was $98 billion.

In 1987, Congress projected that Medicaid - the joint federal-state health care program for the poor - would make special relief payments to hospitals of less than $1 billion in 1992. Actual cost: $17 billion.

The list goes on. The 1993 cost of Medicare's home care benefit was projected in 1988 to be $4 billion, but ended up at $10 billion. The State Children's Health Insurance Program (SCHIP), which was created in 1997 and projected to cost $5 billion per year, has had to be supplemented with hundreds of millions of dollars annually by Congress.

Barely two weeks in office, Mr. Obama signed a $33 billion bill that will add 4 million mostly low-income children to the SCHIP program over the next 4 1/2 years.
So what if Obamacare is going to outrun projections? Those projections were just phonied up give Democrats talking points. No one believed them. Anyone paying attention knew that they were fake. They served their purpose. Now we'll all have to be paying the piper.