Just how accurate is the CBO?

Supporters of the healthcare bill have been dancing in the streets since yesterday's report indicated that the Congressional Budget Office projects a $132 billion savings over 10 years on a bill that will cost $940 billion.

Notwithstanding the fact that the CBO numbers:

• Are preliminary;
• Don't take into account the impact of the House reconciliation bill; and
• Have an overly optimistic assumption that government bureaucrats will figure out how to cut costs of Medicare and Medicaid without cutting services....

The real question here is: just how accurate is the CBO?

Here's a quote from a Newsweek article last fall about how accurate the CBO numbers will be on healthcare:
While the CBO puts together its most comprehensive prediction possible, it often gets it wrong with big health legislation. It's not a lack of expertise or bias that causes the predictions to miss the mark, says Stuart Altman, a Brandeis University economist: "The problem is what we're asking them to do is impossible." Health-care legislation is the toughest to score accurately, says Robert Reischauer, former CBO director, because unlike laws that change the tax code or budget new building projects, there are often no data to examine.  -- Newsweek, October 8, 2009.

Another article examining the accuracy of the CBO in the past, says that the CBO projections are less accurate than an astrology horoscope.

Congressional Math and the Healthcare "Reconciliation" Bill

Only in Washington DC does spending $940 billion add up to a $100 billion savings.


By now many of you have seen the headlines discussing how the CBO has estimated that HR 3590 will "save" $100 billion off the deficit over the next 10 years. There has been a lot of dancing in the streets that somehow this is a wonderful thing.

Don't get me wrong -- I would very much like our federal deficit to be reduced....but there are just a few things that are bugging me about why this latest proclamation should be the reason our lawmakers should vote "yes"....

First, the CBO numbers are not final. They are preliminary...and based on a very optimistic assumption that the government will be able to gain greater cost savings and efficiencies on Medicare costs...More importantly, the CBO numbers do not take into account the House reconciliation bill which amends the original Senate bill -- which adds additional costs and increased taxes (some of the additional costs and taxes are mentioned in today's Reuters article.) 

Second, last time I checked, if you spent more than you saved...well then you haven't really saved. At least that's how it works with regards to my finances. HR 3590 will cost $940 billion (that's nearly a trillion folks) over the next 10 years -- and those are the Democrats estimates. That doesn't include the fact that the bill is expected to do NOTHING to reduce healthcare costs (check out my earlier blog post on this yesterday). Yup, all of this government regulation and we will still have escalating health care premiums, costs, etc.

Third, listen carefully to what the supporters of this legislation are saying now versus what they (and our President) said before. Initially, this legislation was supposed to be about reducing escalating healthcare costs. Reducing the deficit by $100 billion (while spending $940 billion - can anyone tell me the math on this one?) -- does not have anything to do with fixing what's wrong with our healthcare system. Passing this bill will not create increased competition (that would reduce health insurance premiums), it will not create job growth (outside of DC where we will have even more bureaucracy), and it will not reduce healthcare costs. In fact, it will have the exact opposite effect when you consider that the large taxes, fees and fines that will be imposed on health insurance companies, pharmaceutical companies, large health insurance plans, and companies (who do not provide insurance coverage) will ultimately trickle down to you and me in terms of higher costs and less jobs.

Fourth, lets not forget the additional costs that will be added onto the American taxpayer to "pass" this legislation...what I'm talking about is all the pork and "favors" that have been included in this bill to garner votes. The Democrats have made a big deal out of the fact that the reconciliation bill nixes the "Nebraska" provision -- but that was only one of many "provisions" that were added by the Senate to win votes.

That said, some people would have you believe that the reason to support this bill is that there is no other option. Nothing could be further from the truth. Several Republicans have proposed legislation that would not impose new taxes (thereby hindering economic growth) and would create market and tax incentives to encourage greater health care savings for individuals and families, as well as encouraging companies to provide health insurance coverage to their employees. HR 3400 creates a safety net for individuals with pre-existing conditions, allows for individuals to purchase health insurance across state lines (which would encourage more competitive pricing of plans) and allows for individuals and small businesses to pool resources together to achieve greater discounts on health insurance plans. Ironically this bill was introduced last summer (yup, before HR 3590). The reason you've probably never heard of it is because there was virtually NO MEDIA COVERAGE of the bill. I encourage you to check it out.

I urge you to call your congressman, congresswoman and Senators TODAY, TOMORROW and SUNDAY to tell them to vote NO, absolutely NO on HR 3590 and HR 4872. And please urge your friends and family to call as well!







Respectfully,



E.E. Wang Lukowski

A Tale of Two Bills

This is a tale of two bills -- two healthcare bills. 
One was 2,409 pages long HR 3590 (introduced November 2009)
One was 268 pages long HR 3400 (introduced July 2009)

HR 3590 proposed:

• Tax credits would be eligible for families and individuals whose household income was up to $40,000-$80,000 (for a family of four) who could not afford health insurance.
• Would tax large health insurance plans 40%, health insurance companies, pharmaceutical and medical supply companies
• Relies on as yet undertermined "cost savings" on Medicare to pay for costs of the plan.
• Would fine individuals who do not have insurance starting in 2014 ($750 or up to 2% of their income whatever is greater).
• Would have the federal government regulate any new plans and any changes to existing plans.
• Would provide a safety net for individuals with pre existing conditions
• Would require all states to have a health insurance exchange and would require all state plans to meet federal requirements.
• Would require all businesses with 50 or more employees to have health insurance or face a fine per employee.
• Included many other "pork" provisions to incentivize politicians to vote for the legislation.
• Does not spell out any details for actually reducing health care costs.
• Does not allow small businesses or individuals to pool their resources to reduce health program costs.
• Does not allow people to purchase health insurance across state lines which would increase competition.

HR 3400 included provisions for:

• Providing tax incentives and credits to all individuals, families and small businesses for acquiring health coverage. This included allowing individuals and families to apply the tax credits directly to premium payments.
• Does not reduce Medicare benefits.
• Does not try to get  the biggest and most wasteful organization in the US (the US government) to run another wasteful industry (health insurance companies).
• Small businesses would be financially incentivized through tax credits and breaks to provide group health coverage and auto-enrollment to their employees.  HR 3400 also would allow individuals and small businesses to  pool with other small businesses/groups to achieve greater discounts. Individuals could also join group associations that provide health insurance.
• Providing a safety net and coverage for individuals with pre-existing conditions.
• Allowing individuals to shop for coverage across state lines, thereby increasing competition in health insurance premiums.
• Providing financial incentives for wellness.
• Increasing liability protections for health practitioners and those volunteering to provide health care to reduce the number of frivilous lawsuits that lead to increasing the cost of health care.
• Increasing transparency on health coverage options and health care providers through public information portals.
• Financial incentives to reduce physician shortages through loan forgiveness and other tax incentives.

Many of the good things in 3590 are also in 3400...3400 does not try to get the government to control costs (something which it has a horrible record of actually accomplishing) but tries to incentivize the private sector and using the fundamental rules of capitalism to reduce healthcare costs. Will taxing "cadillac plans", pharmaceutical companies and insurance companies actually result in lower costs for the average working American? Let's face it -- when big companies are taxed -- we, individual citizens, are the ones who ultimately end up footing the bill -- in higher insurance premiums, higher medical prescription costs, etc.

Let's not forget also the costs to the American people that the Democrat leadership -- in their desperate bid to get votes -- will have given away in the form of "pork" and other favors included in the HR 3590 legislation.

This bill is wrong for many reasons but here are just a few:

• It does not reduce healthcare costs and may likely lead to increased health care costs. Check out: Christian Science Monitor's article on this issue.  Keep in mind that what the Democrats are saying is that this health care bill will reduce the government deficit (projected -- and based on what reality and what assumptions?)...nothing has been said about actually reducing healthcare costs - a significant change from what our President said was his goal before.
• It will dis-incentivize the formation or growth of new businesses/job growth at a time when Americans need jobs (so we can pay for healthcare and all the other pork Congress is passing).
• It does nothing to stop frivilous medical malpractice lawsuits.
• The process by which it is being "passed." Check out this article from Open Congress. This little used parliamentary procedure would allow Democrats to say they didn't actually "vote" for a bill that nearly 2/3 of the country is opposed to but still pass it.

Please call your Congresswoman/man and Senators today -- tell them you do not support passing HR 3590.