Surprise! ObamaCare will increase expenses, says Medicare actuary
posted at 8:47 am on April 23, 2010 by Ed Morrissey
Barack Obama and Democratic leadership in Congress insisted that their health-care system overhaul would cut costs while adding over 30 million people to government insurance rolls, a claim that the national media sometimes seemed to accept blindly rather than question seriously. Its authors also insisted that the expansion would not come at the expense of the middle class, preserving Obama’s promise not to heap more costs on the backs of families. One month to the day after the passage of ObamaCare, two reports show both pledges as nothing but spin.
First, the actuary for Medicare and Medicaid confirm what ObamaCare critics have said all along — that the massive government overhaul is going to increase costs at a higher rate than if Congress had done nothing at all:
President Obama’s health care overhaul law will increase the nation’s health care tab instead of bringing costs down, government economic forecasters concluded Thursday in a sobering assessment of the sweeping legislation.
A report by economic experts at the Health and Human Services Department said the health care remake will achieve Obama’s aim of expanding health insurance — adding 34 million Americans to the coverage rolls.
But the analysis also found that the law falls short of the president’s twin goal of controlling runaway costs. It also warned that Medicare cuts may be unrealistic and unsustainable, driving about 15% of hospitals into the red and “possibly jeopardizing access” to care for seniors. …
The report acknowledged that some of the cost-control measures in the bill — Medicare cuts, a tax on high-cost insurance and a commission to seek ongoing Medicare savings — could help reduce the rate of cost increases beyond 2020. But it held out little hope for progress in the first decade.
“During 2010-2019, however, these effects would be outweighed by the increased costs associated with the expansions of health insurance coverage,” wrote Richard S. Foster, Medicare’s chief actuary. “Also, the longer-term viability of the Medicare … reductions is doubtful.” Foster’s office is responsible for long-range costs estimates.
Let’s not forget that those Medicare reductions are already about to be reversed anyway. In order to get the AMA to support ObamaCare, Democrats had to commit to the “doctor fix,” which eliminates a scheduled cut in Medicare reimbursement rates. Because Nancy Pelosi and Harry Reid kept the “doctor fix” out of the bill, the initial CBO scoring which showed ObamaCare saving money will have no relevance. This report doesn’t even take the “doctor fix” into account when concluding that ObamaCare will bust budgets — which means that rescinding the cuts will make matters even worse.
According to another report by the CBO and the JCT released yesterday, things will get worse for 4 million people once the federal mandates start getting enforced, and that the government will get $4 billion a year starting in 2017 from the fines:
The Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) have estimated that about 21 million nonelderly residents will be uninsured in 2016, but the majority of them will not be subject to the penalty. Unauthorized immigrants, for example, are exempted from the mandate to obtain health insurance. Others will be subject to the mandate but exempted from the penalty—for example, because they will have income low enough that they are not required to file an income tax return, because they are members of Indian tribes, or because the premium they would have to pay would exceed a specified share of their income (initially 8 percent in 2014 and indexed over time). Individuals may also be granted waivers from the penalty because of hardship and may be exempted from the mandate on the basis of their religious beliefs.
Among those who are subject to the penalty, many will voluntarily report on their tax returns that they are uninsured and pay the amount owed. However, other individuals will try to avoid making payments. Therefore, the estimates presented here account for likely compliance rates, as well as the ability of the Internal Revenue Service (IRS) to administer and collect the penalty. In total, about 4 million people are projected to pay a penalty because they will be uninsured in 2016 (a figure that includes uninsured dependents who have the penalty paid on their behalf).
CBO and JCT estimate that total collections from those penalties will be about $4 billion per year over the 2017–2019 period.
Remember when Democrats and the Obama administration insisted that the IRS couldn’t enforce the mandate? Looks like someone forgot to tell the IRS, the CBO, and the JCT. It seems unlikely that either body would have concluded that 4 million Americans would pay $4 billion a year in voluntary donations to federal coffers.
We’ve heard a lot of nonsense about ObamaCare and its fiscal discipline coming from its authors, advocates, and the national media. We’re finally starting to get the truth, but only after the bill became law. The electorate needs to punish all of those who voted for this disaster despite its deep unpopularity and work to defund it in the short term and repeal it when possible.
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