The Blog

Obamacare's Ugly Math

The Senate's $2.5 trillion bill will create higher taxes and higher premiums with little return.

7:00 PM, Dec 3, 2009 • By JEFFREY H. ANDERSON
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The scoring is in on the health-care bills, and it's hard to see what the Democrats' proposed health-care overhaul would achieve apart from centralizing and consolidating power in Washington.

During the campaign, then-Senator Obama said, "I am committed to signing a universal health care plan into law by the end of my first term in office. My plan will lower costs $2,500 per year for the typical American family." But the Congressional Budget Office has now released an analysis of the proposed Senate bill that the President is championing, and it turns out that his prior estimate was off by $4,600 a year. The CBO says that the average American family would see its premiums rise by $2,100 a year, at least in the individual market -- the part of the market where everyone agrees that "reform" is most needed.

Were you expecting more for a price-tag of $2,500,000,000,000.00 over 10 years?

True, many Americans would receive subsidies to help cover their higher premiums, but those subsidies would be paid for by other Americans. The Democrats' basic strategy seems to be to drive up premiums and then put far more people on the dole to help pay for them.

But the scoring doesn't stop there. The Office of the Chief Actuary for the Centers for Medicare and Medicaid Services (CMS) estimates that under the House health bill, the percentage of the United States gross domestic product spent on health care would rise from 17 percent today to 21 percent in 2019. CMS's Chief Actuary also says that we would spend $289 billion more on health care over the next decade under the House health bill than under current law -- and more than $500 billion more unless the Democrats follow through on their wild pledge to cut doctors' pay under Medicare by 21 percent (23 percent in the Senate) and never raise it back up -- ever.

The Washington Post wrote in July, "From the start, President Obama has been firm .He told us flatly that he won't accept a bill that doesn't 'bend the curve' on rising health-care costs." Yet President Obama engineered the passage of the House health bill, which would not bend the cost-curve -- or, more exactly, would bend it in the wrong direction.

The CBO says that under the Democrats' Senate bill, the average premium would rise by 10 to 13 percent in the individual market, compared to premiums being lowered by 5 to 8 percent by the House Republican bill -- a swing in costs of between 15 and 21 percent. In the small-business market, the CBO says that the Democrats' Senate bill would raise premiums by up to 1 percent or lower them by up to 2 percent, compared to the House Republican bill, which would lower premiums by 7 to 10 percent -- a swing of 5 to 11 percent. (The CBO says that each bill would have the same effect on the large-employer market, except that the Senate bill would dramatically increase premiums for "Cadillac" plans.) What are these two bills' costs in their real first decades in operation, according to CBO projections? The House GOP bill would cost $64 billion, and the Democrats' Senate bill would cost $2.5 trillion -- a swing of $2.44 trillion and a ratio of 1 to 41.

The only thing that the Democrats' Senate bill has going for it is that -- despite providing incentives for young, healthy people to dump their insurance until they get sick or injured -- it might help lower the number of uninsured. But at what cost?

According to the Census, there are 28 million uninsured Americans (46 million, minus 9 million non-citizens, minus 9 million on Medicaid whom the Census admits were falsely tallied as uninsured). Also according to the Census, 13 million of those uninsured make more money than the average American. So, 90 percent of Americans are insured, and at least another five percent could afford to be if they wanted to be.

The CBO is adding 5 million uninsured to the Census figure because of the recession (fair enough), but it's failing to account for the Census's admitted Medicaid undercount. The CBO is thereby grossly overstating the number of uninsured -- by about 20 percent.

But let's suspend disbelief and assume that there really are 51 million uninsured in America and that the Democrats' Senate bill really could reduce that number by 31 million over the next ten years, like the CBO says. And even though the CBO says that 90 percent of the progress toward that mark of 31 million would be made between the start of 2014 and the end of 2016, and that little progress would be made thereafter, let's assume that somehow another 8 million people could become newly insured in the decade to follow, for 39 million in total (not all of them Americans).