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
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).
Over that same span of time (2010-29), the CBO says that the bill's costs would be $3.9 trillion for insurance coverage expansions alone ($5.5 trillion for all costs combined). So, according to CBO projections, even under these fancifully rosy assumptions, the bill's costs for every newly insured person would be . . . an even $100,000. A $100,000 ObamaCare policy, anyone?
Since insurance coverage is ObamaCare's strongest suit (it's certainly not cost-containment, promoting liberty, or improving the quality of care), this begs the question: Do the Democrats' proposed House or Senate bills do anything well?
If the evidence presented so far weren't enough, the CBO says that in its real first decade (2014-23) the Democrats' Senate bill would cost $2.5 trillion and would siphon more than $800 billion out of already-barely-solvent Medicare -- just in time for the baby boomers' retirement. And, of course, it would inject the federal government's massive bureaucratic apparatus into the historically private -- and rightfully private -- relationship between patient and doctor.
And, unless it actually permanently cut doctors' pay under Medicare by 23 percent, it would increase deficits by $286 billion in relation to current law. It would do so in spite of the fact that, this September, President Obama spoke to a joint-session of Congress and to a live TV audience of American citizens watching from coast to coast and said the following: "And here's what you need to know. First, I will not sign a plan that adds one dime to our deficits -- either now or in the future [applause]. I will not sign it if it adds one dime to the deficit, now or in the future, period."
In its real first decade (2014-23), the Senate bill would also increase taxes on Americans by a staggering $1.3 trillion. This would include taxes on small businesses that would limit job-creation, and it would also include a tax on "Cadillac" health plans. A little over a year ago, then-candidate Obama said, "And I can make a firm pledge: Under my plan, no family making less than $250,000 will see their taxes increase -- not your income taxes, not your payroll taxes, not your capital gains taxes, not any of your taxes." He added, " My opponent can't make that pledge, and here's why: For the first time in American history, he wants to tax your health benefits."
Now, President Obama wants to tax health benefits -- and for those making far less than $250,000. The CBO says that the Senate bill would tax 19 percent of all employer-based health-care policies by 2016, based on current trajectories. According to the Census, in 2007 the group comprising 19 percent of U.S. households included those making less than $100,000 annually -- a far cry from $250,000. Apparently, $99,000 is the new $250,000.
At every turn, ObamaCare cuts against the stated goals of health-care reform and the "firm pledges" that got President Obama elected.
With nearly every comparison or fact working against ObamaCare, it's hardly surprising that the American public is against it too. Twelve national polls have been released on ObamaCare in the past three weeks (Rasmussen, USA Today/Gallup, Ipsos/McClatchy, Fox, Democracy Corps, Quinnipiac, CBS, CNN, PPP, ABC/Washington Post, Pew, and Public Opinion Strategies), and they've collectively shown it to be losing by 8.0 percent. This isn't the result of some random outlier. If you throw out the high and low polls, ObamaCare is losing by even more.
Perhaps worse still for ObamaCare supporters, the margin is even greater among those who feel strongly. Rasmussen shows that 40 percent strongly oppose ObamaCare compared to only 22 percent who strongly support it.
Furthermore, polls show that independents -- crucial in swing-district elections -- appear to be jumping ship the fastest. In June, a Fox News poll showed that (among those who had an opinion on the matter) 73 percent of independents approved of President Obama's job performance. After a 5-month period during which the president has devoted himself mostly to health care, the same poll now shows that only 40 percent of independents approve of his job performance. Amazingly, the President has lost a third of all independents in less than half a year. It's been 15 years since we've seen such a profound swing over such a limited period of time in American politics.
As the football season hits its apex, the Democrats are salivating at the thought of building a new $2.5 trillion stadium in which to play. But when it comes to lowering costs, their offense has been shut out and has yielded a safety to the defense. When it comes to increasing insurance coverage, it has at best picked up a couple of first downs. And when it comes to maintaining the high quality of care, it has looked decidedly shaky and turnover-prone.
No wonder the American people are increasingly calling for the high-priced backfield of Reid, Pelosi, and Obama to be benched -- along with many of their lesser-known teammates. When it comes to ObamaCare, it's time for the Democrats to punt.
Jeffrey H. Anderson, the director of the Benjamin Rush Society, was the senior speechwriter for Secretary Mike Leavitt at the U.S. Department of Health and Human Services.