Health Care

I had planned to get all my facts ready for this post.  What I realized is that the “facts” don’t exist.  All the facts are really just estimates, best guesses of what is to come.  The CBO says that we will reduce the deficit.  BUT… I would like to point out that the expenses are mandatory, and the revenues are subject to the economy.  The assumption for the Revenue side of the calculation is all contingent on growth in our GDP.  In 2009 we had our first decrease in GDP in over 50 years!  Furthermore, the CBO has to score the bill with the assumptions that the administration puts forth whether or not the CBO believes there to be any truth to the assumptions what-so-ever.

“The President’s budget includes a placeholder of $743 billion in related revenues between 2011 and 2020. Because the Administration did not provide the details of the underlying legislative proposal, for the purposes of this analysis CBO assumed that the policies would have the effect set forth in the budget.” (Quote)

“The proposal with the largest effect on mandatory spending is the one to expand health insurance coverage and make other changes to the health care system. The President’s budget estimates that such legislation would increase mandatory spending by $6 billion in 2010 and $593 billion between 2011 and 2020—about $150 billion less than the added revenues assumed to result from such legislation. As in the case of revenues, that estimate of outlays is a placeholder calculated by the Administration; pending the development of detailed legislation, CBO has incorporated that placeholder in this analysis.” (Quote)

As a Massachusetts resident, I am very skeptical of the estimates.  Our state, which is the blueprint for this federal plan underestimated the costs and we are paying the price. Our treasurer, Tim Cahill, is now running for Governor.  Here is what he had to say before the bill was passed.

“If President Obama and the Democrats repeat the mistakes of the health insurance mandate in Massachusetts on a national level, they will bankrupt this country within four years. It is time for the President and the Democratic Leadership to go back to the drawing board and come up with a new plan that does not threaten to wipe out the American economy.” (Quote)

He has some eye-opening information on his website:

  • Massachusetts health care spending is up 51.9% while Education is down 16.3% (FY2005-FY2010)
  • Federal Funding to the state has almost doubled (FY2005-FY2010)
  • “Only 23% of those people newly enrolled in state-managed insurance programs pay anything towards the cost of that insurance. The rest of the recipients get the insurance at full taxpayer cost.”  (Quote)

Far be it from me to challenge the experts….but I understand those numbers.  Let me leave you with one last parting tid-bit on the state of Massachusetts fiscal position.

Federal funding now covers more than 30% of our spending (over $8 billion of the $27 billion total comes from the Federal government).

And just for the record…as you review this and think to yourself “Maybe they didn’t plan well”  here are some statistics on how well other health care related programs have been estimated.

Historical Examples of Erroneous Health Care Cost Estimates
(millions of dollars)

Benefit

Original estimate

Actual cost

Difference

Error ratio

UK National Health Service 260 359 -99 1.38 to 1
Medicare hospital insurance 9,000 67,000 -58,000 7.44 to 1
Medicare (entire program) 12,000 110,000 -98,000 9.17 to 1
Medicare ESRD program 100 229 -129 2.29 to 1
Medicaid DSH program 1,000 17,000 -16,000 17.00 to 1
Medicare home care benefit 4,000 10,000 -6,000 2.50 to 1
Medicare catastrophic coverage 5,700 11,800 -6,100 2.07 to 1
Massachusetts Health Reform 725 869 -144 1.20 to 1

Filed under: Uncategorized | Posted on March 30th, 2010 by Holly

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3 Responses to “Health Care”

  1. carl Says:

    Today I was discussing this site with some people. One person mentioned that they’d like to see a breakdown of the military costs since they think that is a much more concerning topic. When I mentioned that Medicare/Medicaid costs more than Social Security which costs more than Defense another person questioned the validity of that claim. What follows is an edited version of the thoughts I shared with them.

    According to the 2011 budget the federal portion of Medicare/Medicaid is $782 billion for 2011. The other health care related line items (things like the CDC, NIH, etc.) add another $119 billion, bringing the total to $901 billion for health related services in 2011. Social Security is $770 billion. Defense is $719 billion.

    If you’d like to see these numbers for yourself the 2011 US Budget is here:
    http://www.gpoaccess.gov/usbudget/fy11/index.html

    According to that budget we are supposed to bring in $2.5 trillion in revenue in 2011. Health Care, Social Security, Defense and the interest on our debt ($250 billion) are supposed to cost $2.6 trillion that year. If everything goes exactly to plan, the economy quickly recovers, we didn’t underestimate the cost of anything, we didn’t over estimate the revenues we’ll take in, we didn’t underestimate our debt and therefore our interest, those four items will exceed all of our revenues. How are we going to pay for everything else? How are we going to pay for those four items never mind anything else as the debt continues to grow making the interest payments rise and rise?

    Considering all that you’d think that we have a bit of a problem with our budget. Of course, it’s not that simple. If you read the CBO’s reports you’ll see that they expect our real costs to be higher and our real revenues to be lower. See:
    http://www.cbo.gov/ftpdocs/112xx/doc11231/index.cfm

    If you listen to people on TV, read the newspaper, and browse the news web sites things sound far different than they really are. In order to have even the vaguest notion of what is going on you have to actually read the official reports and bills. Otherwise, you just get random spin generated by politicians and media pushing their own agendas.

    Please remember as you are reading all of this that I do think that all Americans should have access to health care. I am not in any way saying that it is a bad idea to take care of the people in this country. I firmly believe that the USA is rich enough to ensure a basic level of life (food, housing, health care) to all of its citizens. We just need to be very careful how we go about providing that. Given the fact that health care as a whole is by far the biggest item in our budget even the slightest error in our estimations of the cost of these programs and the revenues available will put us into a really bad place. We are already far in debt ($14 trillion according to the 2011 US Budget). Imagine if we continue the way we are going, growing the debt every year. Now imagine what happens if our estimates for the cost of this new health care bill are as bad as our estimates of the cost of Medicare were.

    One of the hardest parts of this is the discrepancy between the revenue and outlay behaviors. During a recession or depression our revenues decrease but our outlays stay the same or increase. Budgets tend to be optimistic and plan for quick recoveries. That’s very dangerous.

    Would you run your household finances this way? Imagine only paying the interest on your mortgage, car loans, and credit cards and still purposely running a budget that required more and more loans every month. I guess it’s ok for the government to behave this way since they can print as much money as they’d like, right? No.

  2. Walker Paugsch Says:

    Wow dude, I never knew this, thankyou.

  3. Round Kitchen Says:

    ,;. I am really thankful to this topic because it really gives great information :*`

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