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CBO: Yep, ObamaCare Shortfall Gets Worse After Initial 10-Year 'Investment'

2:40 PM, Jul 27, 2009 • By MARY KATHARINE HAM
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During his crusade for health care reform, Obama has often warned us about the high costs of "inaction." Sure, health care reform (or, "health insurance reform," as he's calling it now) will cost a lot of money, Obama told us, but it's an "investment" in eventually lowering costs, which is vital to controlling federal deficits and keeping America on a fiscally sustainable path.

The problem is, the Congressional Budget Office continues to point out that the cost of the action Democrats want to take is actually higher than "inaction" (that is, if you're counting in traditional currency and not heart-ache or empathy, as Democrats are wont to do).

"It's about the fact that the biggest driving force behind our federal deficit is the skyrocketing cost of Medicare and Medicaid," Obama said in a prime-time press conference last week, ignoring the fact that the House bill authorizes an expansion of Medicaid that CBO estimates would bring in 10 million new enrollees, at a cost of roughly $500 billion.

Obama continued: "So let me be clear: If we do not control these costs, we will not be able to control our deficit."

The CBO replied (indirectly) in a letter to House Ways and Means Committee members this week:

The net cost of the coverage provisions would be growing at a rate of more than 8 percent per year in nominal terms between 2017 and 2019; we would anticipate a similar trend in the subsequent decade. The reductions in direct spending would also be larger in the second decade than in the first, and they would represent an increasing share of spending on Medicare over that period; however, they would be much smaller at the end of the 10-year budget window than the cost of the coverage provisions, so they would not be likely to keep pace in dollar terms with the rising cost of the coverage expansion.

Revenue from the surcharge on high-income individuals would be growing at about 5 percent per year in nominal terms between 2017 and 2019; that component would continue to grow at a slower rate than the cost of the coverage expansion in the following decade. In sum, relative to current law, the proposal would probably generate substantial increases in federal budget deficits during the decade beyond the current 10-year-budget window.

A friend of the WEEKLY STANDARD translates thusly: "You can't sustainably pay for this health care expansion with these tax increases. You're within $239 B of doing so in the first decade, but the shortfall gets much worse after that."

I translate: "This suckah's just gonna get worse forever and ever, amen."

Cue former acting-CBO Director and member of the Council of Economic Advisers Donald Marron, who offers this chart to illustrate the widening gap that will widen further under this plan:

Offsets don't keep up.png

No wonder these guys have been flipping through the tax code to brainstorm ways to gouge us.

Doesn't this mean that, by Obama's own standards, it might be time to kill it and start over?

Meanwhile, the House Democrats are offering a five-hour seminar on what's actually in the bill, as few on the Hill have any idea. Better late than never I suppose, but Rep. John Conyers will be taking the no-read option on this historic legislation because, you know, what's the point?

"I love these members, they get up and say, ‘Read the bill,'" said Conyers.

"What good is reading the bill if it's a thousand pages and you don't have two days and two lawyers to find out what it means after you read the bill?"