Morgen on July 2, 2009 at 10:32 am
The big headline on healthcare today is that the Congressional Budget Office (CBO) has scored the latest bill coming out of the Senate Health Committee (Kennedy/Dodd) at a net budgetary cost of slightly over $600 billion. Which is well under the $1 trillion estimate from the CBO on an earlier version of this bill just a couple of weeks ago. And even more incredible, the CBO estimates that this updated bill would ultimately result in coverage for 97% of Americans, whereas the earlier version had left tens of millions of uninsured.
Wow – near universal coverage, and for less money. Sounds like a real breakthrough for the Administration and the Senate Democrats crafting this legislation.
Not so fast.
While some of the improvement in the CBO score is based on substantive changes such as the inclusion of the controversial public plan option and an employer “pay or play” mandate, there is a much simpler (and duplicitous) explanation for why the touted cost is so much lower:
The CBO estimate does not include the cost of a significant expansion of Medicaid that is envisioned under this bill.
That’s right – it’s not included. Why? For the simple reason that since Medicaid is an existing entitlement program, any revisions centered around cost expansion must be dealt with by the Senate Finance Committee (remember, this is the Health Committee bill).
And how significant might these additional costs be? If, as expected, the Finance Committee expands Medicaid eligibility up to 150% of the poverty level, this would cover around 20 million more Americans at an estimated gross cost of $1 trillion over 10 years. And importantly, the only way they will come close to achieving 97% coverage is by doing this.
Add this up and the actual cost estimate of this reform package is at least $1.6 trillion. Now remember that the Administration is claiming that they have found a way to reduce Medicare/Medicaid costs by $600 billion over 10 years. Putting aside the political viability of Congress actually going through with all of these cuts, even factoring in these “savings” the net cost of the bill will still be at least $1 trillion.
So at best we are right back to a bill with a net price tag of $1 trillion or more, albeit one that ostensibly provides for more universal coverage.
But providing universal coverage has never been the chief obstacle. The obstacle is the cost, or more precisely how the costs will be actually be paid for. And don’t forget that the Administration is actually selling this $1.6 trillion boondoggle as the means to REDUCE the overall growth in healthcare spending! (I’ll believe those Medicare cuts when I see them).
The real point here is don’t be fooled when you see the media echo the Administration’s talking points on this so-called “breakthrough”. With their headlines touting near universal coverage at a cost of only $600 billion. These reports are erroneous. It’s just one more link in the deceitful chain of false premises – and false promises – that this Administration and their willing accomplices in the media are foisting upon us in order to ram this bill through.
Update: Just to illustrate my point, the White House released a statement today touting the CBO’s score of the Senate Health bill:
The Congressional Budget Office has now issued a more complete review of this bill, concluding that it will cost less and cover more Americans than originally estimated.
This is an outright lie as I documented above. Press Secretary Gibbs was asked about the missing Medicaid costs in the press briefing today and admitted that the White House and Senate Democrats had indeed blatantly misrepresented the facts on this. Nah, just kidding. He gave the weaselly type of answer you would expect: