Thursday, October 8, 2009

Don't Believe CBO Health Care Cost Estimate

Just a short one today. By now you’ve all heard that the CBO scored the Democratic “Baucus” health care bill favorably at $829 billion -- just below the original $900 billion “expected price tag.” You’ve also probably heard that the bill will not increase the deficit one penny. Thus, trumpet the Obamacrats and their fellow travelers in the media. Don’t believe it.

The CBO scoring process is not what you think, nor is it what the Obamacrats are portraying. They want you to believe that the CBO independently evaluated the bill and determined its likely price tag to be “only” $829 billion over ten years. But that’s not how scoring works.

The CBO does not do independent work. When Congress presents the CBO with a bill, the Congress also includes a list of assumptions. In this instance, for example, those assumptions include expected tax increases, magic cost savings from improved health, and spending cuts that will never happen -- unless you believe they really are going to cut Medicare payments in half.

The CBO does not determine whether or not the tax increases, spending cuts or cost savings are real. It just plugs them into its scoring model and spits out a total cost for the bill. Thus, while the score may be accurate for what is presented, the real question is how accurate are the assumptions. In programming speak, this is called garbage in, garbage out.

Think of it this way. If a dieter says that they will eat 10 cakes a day for the next three days, but will then reduce their calories below starvation levels for the next month to burn off those cakes, does any rational person believe that the dieter will be able to complete that diet? Of course not. Yet, if the CBO scored this plan, it would simply accept the assumptions and would conclude that this diet indeed balances out perfectly. Welcome to government reality.

However, there actually is a reason to believe that the bill might be as “cheap” as advertised: it doesn’t cover anyone.

From the Obamacrats themselves, even if the bill works as planned, it will only reduce the number of people without insurance from 46 million to 25 million. . . and it takes until 2019 to do this!

Thus, looking at the ten year budget, the only year that really bears the full cost of the program is the final year. Thus, it's 20 year cost will be many times its 10 year cost, not just double. Moreover, another 21 million Americans will remain uninsured. Further, of the 25 million covered, most will become covered because they will be forced to buying their own insurance (under threat of a $1,900 fine and jail (with a $25,000 fine)).

The Democrats note that this could be a hardship on many people: “For some people it's going to be a heavy lift,” said Sen. Tom Carper, D-Del. But then who cares when you have a legacy to put into law.


Tennessee Jed said...

That is fascinating. I have not trusted government "accounting" but your article helps clarify the "why not" part of the equation.

AndrewPrice said...

It is interesting itn't it. Can you imagine if you or I handled our budgets the same way?

The Republicans (Paul Ryan) were trying to point this out yesterday, but the only media outlet that I think has listened was CNBC (and that was only temporary -- now they are simply using the $829 million figure without mentioning any caveats).

patti said...

that they are basing a cost on an unknown (the actual bill is nowhere near what it will be in the end...or our end) is stupidity cubed. who does this?! i have always said to run this country as we would run a household to get a grip on costs (obviously there are things that aren't included in my household, like military reinforcements), but washington has little interest in what we are saying. a mighty revolt is coming. may god be with us.

(by the way, as i wrote my entry today i had to refrain from making it a page of expletives. my blood is boiling.)

AndrewPrice said...

Patti, I could tell. But, as you point out, there is a LOT of reason for our blood to boil. They are trying to force this thing upon an unwilling population through deception and procedural tricks.

If it's really such a good idea, then put it out there in the open and defend it.

LawHawkSF said...

Andrew: Well said. The Democrats have been handed several shocks as the CBO refuted the party line on costs. So this time, the Democrats built in the preconditions, made up the parameters, outright lied about certain facts, and handed the CBO a predigested plan which left no room for the CBO to use standard accounting procedures to disprove the Congressional numbers. If the CBO had true integrity, it would have released the report with the caveat: "This report is based solely on unverifiable numbers and questionable facts. Therefore, we take make no representation that the report is either true of accurate."

Writer X said...

Andrew, I was so hoping you'd write about the CBO this week. Thank you! I've heard so much mumbo jumbo about it on the news. I knew it was too good to be true. I'm going to link to this on my blog. People must read your analysis.

StanH said...

What’s the big deal Andrew, you know that it’s cool now. The CBO has scored it as deficit neutral, and we’ll all have lollypops and moonbeams. Washington has lost it’s collective mind if they think that a CBO scoring, which on long term forecast are never right is going to change the publics mind, they’ve got another thing coming. I’m with Patti I don’t think they care. It’ll be their ass in 2010.

AndrewPrice said...

Writer X, You're welcome. I kept waiting for someone to mention this. I saw the interview with Ryan on CBNC, they even talked about it, and then . . . nothing. I can't even find written stories about this. Everyone just accepts this like the CBO has given it a clean bill of health.

P.S. Thanks for the link. :-)

AndrewPrice said...

Stan, I think they care very much, which is why they do this -- they're trying to deceive us. And most people will simply hear "CBO says health care bill is deficit neutral" and they'll believe it.

Lawhawk, I do think the CBO has a good deal of credibility, it's just that Congress misuses it.

Cheryl said...

Thank Andrew. I have sent this to everyone on my email list.
Ryan is my Congressman. When we talk about throwing them all out, I always have an asterisk that says - Except Paul Ryan.

AndrewPrice said...

Cheryl, You're welcome. Ryan seems like a good guy with some excellent ideas, and he certainly deserves kudos on this one!

MegaTroll said...

I knew something was up with that number. Thanks for laying it out. I haven't seen this anywhere else!

AndrewPrice said...

You're welcome Mega, spread the word.

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