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The Spectacle Blog
The chief actuary for the Centers for Medicare and Medicaid Services, a division of the Department of Health and Human Services, has released a report showing that the new national health care law will increase health care spending in the United States beyond already unsustainable levels.
During the health care debate, President Obama argued that we couldn’t afford not to pass his brand of health care reform.
“Make no mistake: The cost of our health care is a threat to our economy,” Obama told the American Medical Association last June. “It’s an escalating burden on our families and businesses. It’s a ticking time bomb for the federal budget. And it is unsustainable for the United States of America.”
But for all the talk over the past year about “bending the cost curve down,” CMS, the agency that is tasked with tracking national health care expenditures, has now projected that the new law will actually bend the cost curve in the opposite direction. That is, up.
Not surprisingly, CMS notes that, “Numerous studies have demonstrated that individuals and families with health insurance use more health services than otherwise-similar persons without insurance.” Thus, expanding coverage will mean greater usage of health care services.
In that same AMA speech, Obama said more specifically, “If we fail to act, one out of every five dollars we earn will be spent on health care within a decade.”
But according to CMS, after the passage of ObamaCare, health care spending will eat more than one out of five dollars in the economy. Specifically, by 2019, health care spending is now projected to represent 21 percent of GDP, as opposed to an estimated 20.8 percent had the new law not passed. In dollar terms, that translates into $311 billion more in spending over the next decade. I’ve created the graph below to demonstrate this.
Liberals could respond to this report by arguing that covering 34
million additional people – as CMS projects — justifies an
increase in spending that is modest relative to the more than $35
trillion we’re projected to spend on health care over the next
decade. But as demonstrated by Obama’s statements above, of which
I could have found numerous others, the law was sold to the
American people on the basis of the fact that it would
substantially reduce costs that were crippling our economy.
In the rest of the 38-page report, actuary Richard Foster confirms many of the arguments conservatives have been making throughout the health care process. For instance:
— By delaying the major spending provisions until 2014, Democrats hid the true 10-year cost of their legislation: “Because of these transition effects and the fact that most of the coverage provisions would be in effect for only 6 of the 10 years of the budget period, the cost estimates shown in this memorandum do not represent a full 10-year cost for the new legislation,” CMS says.
— Medicare cuts are unlikely to materialize: The CMS report cautions that “it is important to note that the estimated savings shown in this memorandum for one category of Medicare provisions may be unrealistic.” The reason is that if the proposed cuts to payments to hospitals, nursing facilities, and home health agencies go into effect, “roughly 15 percent of Part A providers would become unprofitable within the 10-year projection period…” The only way to resolve this problem would be to prevent the cuts, which in turn would eat up some of the projected savings from the legislation.
— You can’t double count the Medicare savings: While in theory Medicare Part A cuts would extend solvency of the program by 12 years, the actuary writes, “In practice the improved (Medicare hospital insurance) financing cannot be simultaneously used to finance other Federal outlays (such as the coverage expansions) and to extend the trust fund, despite the appearance of this result from the respective accounting conventions.”
— The CLASS Act is a ponzi scheme: One of the most under-reported aspects of the new health care legislation was that it creates a smaller new entitlement within the massive entitlement – a program pushed by Ted Kennedy that would allow individuals to purchase long-term care insurance through the government. But the program begins collecting premiums before paying out benefits, making it produce surpluses in the early years that Democrats claimed as deficit savings. However, CMS notes that, “After 2015, as benefits are paid, the net savings from this program will decline; in 2025 and later, projected benefits exceed premium revenues, resulting in a net Federal costs in the longer term.”
The report goes on to say that the CLASS program is likely to be used by those with more health problems, meaning it faces “a significant risk of failure as a result of adverse selection of participants.”
View all comments (127) | Leave a comment
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gsr| 4.23.10 @ 2:21PM
Liberalism/Leftism/Statism/Progressivism = spending/spreading wealth(money) from one group to another (usually a group that is a loyal voting constituency of the liberal/left political class).
Economic growth is the only tried and true and the fairest way to "spread wealth". The harder working, the smarter, the more industrious get ahead. In fact, virtually anyone who doesn't make critically bad decisions in the early 20's, can succeed just nicely in a free market, capitalist society.
Clearbrook| 4.23.10 @ 2:46PM
I'd agree with you but for one point gsr: Unfortunately for those whose parents, trying to "do the right thing" for their children and utilizing whatever entitlements they can qualify for, their children are handicapped into thinking that they CAN'T get ahead and that depending upon entitlements is the "way it is done". Some of them may overcome this serious handicap (which is ALSO resposible for making the poor poorer, I might add) but most will not, subjecting them to perpetual enslavement to the Goernment, upon whom they think their survival depends! This is the GOAL of the Socialist State or ANY Statist type Government, I might add: make as many people as possible think that they can't live with out the Nanny State taking care of everything! Some are doing it out of an altruistic belief that such truly is the case for these people already. Most do it to obtain POWER and AUTHORITY and really care nothing for the plight of their more COMMON brethren! Those are the Elitist Snobs, who like Obama, think they are better than the rest of us!
mark kennedy| 4.29.10 @ 8:11PM
There is an excellent documentary program about Obamacare. FRONTLINE produced a show called "Obama's Deal". It exposes all of the back-room deals that went into making the health care bill. You can view the entire episode online here:
http://www.pbs.me/
Click on the FRONTLINE Icon.
Pingback| 4.23.10 @ 3:04PM
The American Spectator : AmSpecBlog : CMS Actuary Finds ObamaCare … capital universi links to this page. Here’s an excerpt:
Gene| 4.23.10 @ 3:18PM
Well Surprise Surprise !!!!
Dave| 4.26.10 @ 6:44AM
http://www.youtube.com/watch?v=J6_1Pw1xm9U
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Sascha H. James | 4.23.10 @ 5:54PM
Lets Finish This
Pingback| 4.23.10 @ 6:16PM
The American Spectator : AmSpecBlog : CMS Actuary Finds ObamaCare … American Me links to this page. Here’s an excerpt:
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Curly Smith| 4.23.10 @ 6:48PM
The CMS agrees that ObamaCare will bend the cost curve, so we'll call that a win. As for up versus down, well that's purely subjective. It will cost more than last year, but it would have cost more anyway. So let's look at the projections from the bipartisan ObamaStash Group and see what they project for spending both with and without the best healthcare legislation ever passed... why it clearly shows that spending would be higher without the best healthcare legislation ever passed. Kindly ignore the "Unemployment and Stimulus Spending" remarks on the slide, it's an early draft.
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zhou| 4.24.10 @ 2:38AM
project for spending both with and without the best healthcare 星际争霸 legislation ever passed... why it clearly shows that spending would be higher without the best healthcare legislation ever passed. Kindly clothing ignore the "Unemployment and Stimulus Spending" remarks on the slide, it's an early draft.
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just the facts| 4.24.10 @ 12:49PM
This was known before health care reform passed.
Over the next decade, the Affordable Care Act expands coverage, and offsets the cost with a mix of new taxes and spending reductions. It's not supposed to control costs over this time. It will provide coverage to some 30 million people who don't have it, while only expanding total spending by less than one percent. That's what it's supposed to do.
Then, after 2019 the cost controls kick in and the total spending on health care will be reduced. Conservatives are attempting to draw sweeping conclusions from only half of the available information and make it fit into their anti-HCR talking points. An honest criticism would acknowledge the fact that this information was known a year ago and include post-2019 cost projections.
This demonstrates the "epistemic closure" of the conservative mind we've been hearing so much about lately.
lanyard| 4.24.10 @ 3:16PM
The fact that you use the term ObamaCare demonstrates that you have an agenda against it, and therefore makes everything you say about it suspect to thinking people.
Pingback| 4.24.10 @ 7:54PM
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PB| 4.24.10 @ 9:16PM
As always, a failure at Civics AND Statistics : http://www.tnr.com/blog/jonath.....lth-report
Pingback| 4.24.10 @ 11:00PM
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Oldbull| 4.25.10 @ 3:08AM
lanyard, the fact that you offer neither facts nor logic in rebuttal makes everything you say suspect to thinking people.
PB: I agree, Jonathan Chait is always a failure at both civics and statistics. I'm glad I didn't dirty my mouse by clicking on that link.
CLASS is a CLASS-ic example of the liberal's "nose in the tent" strategy. The benefit is too small to be of any use, so it will have to be raised, which means that taxes will have to be raised and more people will have to be dragooned into the program. Thus, eventually, forcing private LTC insurers out of the market and leaving only the Leviathan to pay for LTC for everyone.
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Oldefarte| 4.25.10 @ 2:17PM
OF COURSE, IT IS A DEFICIT/DEBT INCREASING, WELFARE ORIENTED, WEALTH RESTRIBUTING FUNDED, ENTITLEMENT, and anyone believing otherwise is stupid, brainwashed, or a typical Democrat charletan! It impossible to add 30 million recepients to the healthcare rolls [most of whom will receive their benefits free from the taxpayers] without it balooning the debt/deficit. It's simply ludicrous that the American voters are apparently that stupid that they believe this CHICAGO WAY BULL EXCREMENT!!!!!!!!!!!!!!!!!!!!!!
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dofus kamas | 4.28.10 @ 2:44AM
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Melissa | 12.22.10 @ 1:46AM
Interesting huh? Thank you for posting the article. It still hurts a little to read this. HA
Andrew | 9.24.11 @ 4:30PM
Health care costs are exceedingly costly. It is the sole largest expense in nations such as USA. I strongly believe with the new wellness industry and alternative medicine industry emerging it will reduce costs and providing a great business opportunity. Wellness centers like, livingwellmedical.com , which is in NYC.