Thursday, December 24, 2009

CBO Says Senate ObamaCare Not Deficit Neutral

When Congress comes back from it’s Christmas break, they are going to have to deal with a serious funding problem with the new Healthcare bill. The original CBO estimate of the Senate version of ObamaCare showed it would save $130 billion over 10 years; this figure has been parroted by both Harry Reid and the President. The problem is just prior to the Senate vote, the CBO issued a letter saying they had errored in their estimate. The main funding for the November Senate ObamaCare over 10 years is as follows*:

$149 billion -Taxing “Cadillac” Health Plans

$190 billion -Reducing expansion of Medicare fee for service plans

$200 billion -Cuts to Medicare Advantage

$36 billion -Penalties

The main areas of cost for the Senate ObamaCare over 10 years is as follows*:

$ 447 billion -HealthCare Exchange

$ 374 billion -Cost to expand Medicare

$14 billion - Misc

*The figures used are similar to published funding and cost estimates, but are presented for demonstration purposes.


If you add up the totals, there doesn’t seem to be enough to pay for the plan, none the less have an extra $130 billion; that because there’s not. The plan is going to cost about $835 billion, while the funding is $575 billion. You know, I’m not an accountant, and I’m certainly not a member of the Congressional Budget Office, but I see a problem here; so did Senator Jeff Sessions (R-AL). He took a trip to the CBO to find out how one uses $575 billion to pay for an $835 billion plan, and come out with an extra $130 billion. Well CBO Director Doug Elmendorf explained the error. It seems the CBO pays Medicare from a trust fund. When figuring the cost of ObamaCare, they mistakenly paid the increases in Medicare ($374 billion) with the same money that was going to be cut from Medicare ($390 billion); in other words the Medicare money in the trust was used twice. If one factors in an additional $390 billion dollars for funding, to the original $575 billion funding ($965 billion); subtract the $835 cost of the health plan; hey!, you’ve got $130 billion dollars left over. Turns out the Health plan is actually $260 billion in the hole (Sessions cited a $300 billion deficit). Check out FOXNews GOP Senator Senate Health Care Increase Federal Deficit, which includes the letter from Doug Elmendorf.

If you take them at their word, the Democrats are in a world of hurt. Pres Obama has promised on numerous occasions not to sign off on a healthcare bill if it increases the deficit by “one thin dime”. Senator McCaskill from Montana said My statement all along is it has to slow down the increase of health care costs over time, and that is bending the cost curve, and secondly, that it has to be deficit neutral,” and she added “We have to be saving more money for our government than we’re spending. And if we’re not saving more money for our government than we’re spending, then not only will I not support it, the president said he won’t support it,” she added. So if the Democrats are to be believed, the HealthCare bill is dead without a huge increase in funding. The only Democratic response from Harry Reid’s spokesman, "The statements in CBO's December 19th letter about the federal budgetary commitment to health care remain correct," said spokesman Jim Manley. "After 2019, the effects of the proposal that would tend to decrease that commitment would grow faster than those that would increase it. As a result, the CBO expects that the proposal would generate a reduction in the federal budgetary commitment to health care during the decade following the 10-year budget window." In other words, ignore the problem; but that was to be expected. What was Harry Reid supposed to say? He just discovered all his bribery and posturing had may have just gone up in flames.

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