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Tuesday, June 16, 2009

A "Nuclear Bomb" in the Health Care Debate

That's how Stu Varney of Fox News just described the prelminary budget analysis from the Congressional Budget Office' analysis of Ted Kennedy's version of universal health care.

According to our preliminary assessment, enacting the proposal would result in a net increase in federal budget deficits of about $1.0 trillion over the 2010-2019 period. When fully implemented, about 39 million individuals would obtain coverage through the new insurance exchanges. At the same time, the number of people who had coverage through an employer would decline by about 15 million (or roughly 10 percent), and coverage from other sources would fall by about 8 million, so the net decrease in the number of people uninsured would be about 16 million or 17 million.

These new figures do not represent a formal or complete cost estimate for the draft legislation, for several reasons. The estimates provided do not address the entire bill—only the major provisions related to health insurance coverage. Some details have not been estimated yet, and the draft legislation has not been fully reviewed. Also, because expanded eligibility for the Medicaid program may be added at a later date, those figures are not likely to represent the impact that more comprehensive proposals—which might include a significant expansion of Medicaid or other options for subsidizing coverage for those with income below 150 percent of the federal poverty level—would have both on the federal budget and on the extent of insurance coverage.

So, the analysis runs like this. It will cost $1 trillion over the next ten years and it will only cover one third of those uninsured. It should be noted that the figure of uninsured also includes illegal immigrants. The White House is already in full damage countrol mode. The statement from the White House is that the plan analyzed by the CBO is NOT the final plan.

That's all true, however, it's very unlikely that the final plan will cost all that much less. So, we can expect that covering all those uninsured in America will cost somewhere in the neighborhood of $300 billion yearly.

That is simply something that will not happen. The public was already weary of Obama's health care reform package and that's when the public expected it to cost $100 billion yearly to insure all those that are currently uninsured. Now, the CBO has figured that number to be three times that estimate.

Furthermore, within the analysis is the prediction that about 23 million people would be removed from the private insurance rolls. This is due to the crowding out effect of the public insurance option. As such, the CBO agrees with those like me that assert that public health insurance would eventually crowd out more and more private health insurance providers until eventually it becomes the only option.

There is no doubt that this analysis is like a haymaker to a fighter that just took the eight count. If Obama's health insurance still passes then Republicans have only themselves to blame. Now, they have all the ammunition they need to make the case that this is the wrong plan at the wrong time.


Rick007 said...

Who the hell is counting the new ileagles that come across our border each year????

mike volpe said...

the way it is counted is by counting how many are caught and then multiplying by a multiplier.

Anonymous said...

That estimate for people leaving employer insurance for the government plan is way, way, WAY, low. Corp. around the country will start dropping their plans as fast as they can. Trust me on this. I spent 25 years at IBM, and the second a corp. bean counter can smell a way to cut expenses, the scalpels will start flying.


Anonymous said...

But then isn't the amount the government would spend countered by the amount the private sector is no longer spending? Besides, at this rate all private sector employers, even the profitable ones, are going to be looking to eliminate their health care benefits.

mike volpe said...

Both of the last points have validity. That said, the amount the private sector spends less is NOT more money in the pocket of the government unless it is in taxes.

The last comment means that inherently more and more people will choose the government plan over private plans even though they are supposedly happy with their current one. To make this argument you would also have to agree that this is a step to single payer. If it is, the government should be honest about their motives.

Lance o Lot said...


Honest. Government.

That's funny.\\

Anonymous said...

What is wrong in having another health insurance company, run by government? If it is able to provide decent service for less premium, as it intends, I am OK with it. Current private insurers afraid to loose profits? Good.

mike volpe said...

What's wrong with it is that the government has a decided advantage. They can always print money. They can afford to lose money. They are much larger than any private company. It's the same problem now with GM and Ford.

If the government is a health insurance company, then they can raise taxes in order to provide rates that are better than private insurers.

All rhetoric aside, if that's the case, why not have the government run a company in all industries?

Why not have the government create a computer company, television, light bulbs,etc. Why stop at health insurance? It's because that's socialism.