The predicted costs of Medicare by the Ways and Means committee in 1966 was that it would cost $3B. Based on their inflation and cost increase predictions, they expected it to cost about $12B annually in 1990. The actual cost in 1990 was $107B.

 

Do you really believe that or are you just playing devil's advocate here.

 

Government involvement never means cheaper...

 

I think it's a fool's game to try predicting the future with any degree of accuracy, but as far as assessing the costs of policy the CBO is the standard. What part of their estimate to you object to?

I think it's a fool's game to try predicting the future with any degree of accuracy, but as far as assessing the costs of policy the CBO is the standard. What part of their estimate to you object to?

 

Their own language... Have you read it...

 

our analysis does not incorporate the administrative costs to the federal government of implementing the specified policies nor all of the proposal's likely effects on spending for other federal programs; we expect to include those effects in the near future

 

We all know how efficient the federal government is at management, so I am sure those implementation costs will be very low ...

 

Their "creative" accounting...

 

The bill is severely backend loaded to facilitate the more palatable attempt to keep it "below $1T" and "deficit neutral" for democrat talking points. However they are accomplishing that by having only 8 billion of the spending in the first 3 years, a total of 77 billion by the end of year 4, so 90% of the spending occurs in the last 6 years. So really this thing is going to cost more on the range of $200B+ per year after year 5. That looks more like 2T over a ten year period to me (years 5-15). The real explosion to the deficit neutral problem starts happening in year 10 through beyond where the shortfalls are projected to be $200B annually by year 20...

 

The tax structure used for the estimates...

 

The CBO used a 3% surtax on those making greater than $1M for their estimates. The bill already shows that the lawmakers believe that number to be waaaay too low in order to receive the revenue necessary to fund it as it states that tax rates could "vary if the bill is more expensive than expected." with the surtax expanding downward to incomes of $350K a increasing the tax on the top end to 5.4% on incomes above $1M.

 

The CBO also uses static revenue analysis in their projections. In layman's terms that means they assume that higher tax rates will not change behavior and that the proportional increases in taxes will result in proportional increase in revenue. That just does not happen in reality because behavior does change when taxes are increased and the expected revenues from higher taxes are never achieved because of this.

 

The other half of the money...

 

The $500B freed up from Medicare/Medicaid of which the bulk is alleged to come from "wasteful spending" and "fraud". If we have that much wasteful spending and fraud now, then why is it not being currently addressed as it surely would be in any privately run enterprise. If I ran a private business that was looking expand and I asked my CFO how we were going to pay for it and his reply was "we are going to cut out the wasteful spending and fraud", my next two words to him/her would be, "You're fired." The more likely reality is that there is not near that level of wasteful spending or fraud, even in a government run enterprise, and that shortfall will be made up through??? additional taxation, cuts, your guess is as good as mine.

 

Your turn...

Edited March 4, 201016 yr by Gunner11

Their own language... Have you read it...

 

our analysis does not incorporate the administrative costs to the federal government of implementing the specified policies nor all of the proposal's likely effects on spending for other federal programs; we expect to include those effects in the near future

 

We all know how efficient the federal government is at management, so I am sure those implementation costs will be very low ...

 

Since the biggest part of the legislation is regulatory changes and shifting funds and policies from things that already exist I don't really expect there to be a massive amount of money to be hidden in this. I'd be inclined to agree with you if this bill included the public option or a new bureaucracy and the CBO still included this caveat, but it doesn't.

 

Their "creative" accounting...

 

The bill is severely backend loaded to facilitate the more palatable attempt to keep it "below $1T" and "deficit neutral" for democrat talking points. However they are accomplishing that by having only 8 billion of the spending in the first 3 years, a total of 77 billion by the end of year 4, so 90% of the spending occurs in the last 6 years. So really this thing is going to cost more on the range of $200B+ per year after year 5. That looks more like 2T over a ten year period to me (years 5-15). The real explosion to the deficit neutral problem starts happening in year 10 through beyond where the shortfalls are projected to be $200B annually by year 20...

 

Not really. It's true the funding begins before the payouts do in year six, which does make the ten year figure look nice, but the subsequent ten years have projected revenues of $2.95 trillion which more than covers the projected outlays.

 

The tax structure used for the estimates...

 

The CBO used a 3% surtax on those making greater than $1M for their estimates. The bill already shows that the lawmakers believe that number to be waaaay too low in order to receive the revenue necessary to fund it as it states that tax rates could "vary if the bill is more expensive than expected." with the surtax expanding downward to incomes of $350K a increasing the tax on the top end to 5.4% on incomes above $1M.

 

The CBO also uses static revenue analysis in their projections. In layman's terms that means they assume that higher tax rates will not change behavior and that the proportional increases in taxes will result in proportional increase in revenue. That just does not happen in reality because behavior does change when taxes are increased and the expected revenues from higher taxes are never achieved because of this.

 

I don't believe you can say that in absolute terms, but it sounds like you know more about accounting than I do. I don't disagree that behavior isn't static or that this isn't one of the perils of predicting future economic trends, but any other method is going to be just as given to these limitations and probably used to buttress a partisan argument.

 

The other half of the money...

 

The $500B freed up from Medicare/Medicaid of which the bulk is alleged to come from "wasteful spending" and "fraud". If we have that much wasteful spending and fraud now, then why is it not being currently addressed as it surely would be in any privately run enterprise. If I ran a private business that was looking expand and I asked my CFO how we were going to pay for it and his reply was "we are going to cut out the wasteful spending and fraud", my next two words to him/her would be, "You're fired." The more likely reality is that there is not near that level of wasteful spending or fraud, even in a government run enterprise, and that shortfall will be made up through??? additional taxation, cuts, your guess is as good as mine.

 

Your turn...

 

I agree with that for the most part. Though, rather than a magic wand that evaporates waste, money budgeted for Medicare will be transferred to cover the costs of increasing coverage. All of this doesn't account for the cost curve on health care, which is expected to be flattened according to the Medicare Actuary, either.

 

All of that said I think the most important parts of the bill are the regulatory reforms. I think it's a step towards containing costs, but not a very big one. In an ideal world my health care fix wouldn't look much like this one, but I think this is better than the status quo and there isn't much it can screw up, which is why I support it.

According to the CBO it would reduce the deficit, which I think is a good thing. How would it raise the cost of healthcare?

 

I heard the COOTUS say at the Health Summit that coverage offered will improve which will raise the cost of health care.

 

It is NOT that healthcare will rise with the coverage being the same but rather you will have more coverage which means the cost will go up.

 

BTW, that would be Community Organizer of the United States.

COOTUS

 

I like it. I wonder if he has some more white jackets to give out...

 

 

 

Not really. It's true the funding begins before the payouts do in year six, which does make the ten year figure look nice, but the subsequent ten years have projected revenues of $2.95 trillion which more than covers the projected outlays.

 

 

 

I don't believe you can say that in absolute terms, but it sounds like you know more about accounting than I do. I don't disagree that behavior isn't static or that this isn't one of the perils of predicting future economic trends, but any other method is going to be just as given to these limitations and probably used to buttress a partisan argument.

 

 

 

I agree with that for the most part. Though, rather than a magic wand that evaporates waste, money budgeted for Medicare will be transferred to cover the costs of increasing coverage. All of this doesn't account for the cost curve on health care, which is expected to be flattened according to the Medicare Actuary, either.

 

 

 

The chart of revenue projections and outlays that I saw in the WSJ from the CBO sure does not look to me like the outlays have been covered by revenues in 2020 and beyond, unless you are significantly raising taxes and adding a VAT.

 

The accounting used should not be proportional. History could be used to give a better perspective on the amount of revenues that will come in when taxes increase. It is far from 1 for 1.

 

I also completely disagree with the actuary from Medicare. Costs will continue to increase and this will do very little to flatten those, and for sure not to the tune of half a trillion dollars over 10 years.

 

The whole thing is extremely expensive an will have a sweeping impact on the other 95% in order to "help" the 5%.