Patriot Burr

From The Foundry at the Heritage Foundation,

Last night President Barack Obama promised: “Add it all up, and the plan I’m proposing will cost around $900 billion over ten years.” What are the chances that Obama will keep this promise? ReasonTV examines how the actual price of government programs almost always shoots far beyond the advertised price:

The Senate Joint Economic Committee recently released a study examining the federal government’s track record of measuring the future costs of health care programs specifically. Here is what they found:

Medicare (hospital insurance). In 1965, as Congress considered legislation to establish a national Medicare program, the House Ways and Means Committee estimated that the hospital insurance portion of the program, Part A, would cost about $9 billion annually by 1990.v Actual Part A spending in 1990 was $67 billion. The actuary who provided the original cost estimates acknowledged in 1994 that, even after conservatively discounting for the unexpectedly high inflation rates of the early ‘70s and other factors, “the actual [Part A] experience was 165% higher than the estimate.”

Medicare (entire program). In 1967, the House Ways and Means Committee predicted that the new Medicare program, launched the previous year, would cost about $12 billion in 1990. Actual Medicare spending in 1990 was $110 billion—off by nearly a factor of 10.

Medicaid DSH program. In 1987, Congress estimated that Medicaid’s disproportionate share hospital (DSH) payments—which states use to provide relief to hospitals that serve especially large numbers of Medicaid and uninsured patients—would cost less than $1 billion in 1992. The actual cost that year was a staggering $17 billion. Among other things, federal lawmakers had failed to detect loopholes in the legislation that enabled states to draw significantly more money from the federal treasury than they would otherwise have been entitled to claim under the program’s traditional 50-50 funding scheme.

Medicare home care benefit. When Congress debated changes to Medicare’s home care benefit in 1988, the projected 1993 cost of the benefit was $4 billion. The actual 1993 cost was more than twice that amount, $10 billion.

Medicare catastrophic coverage benefit. In 1988, Congress added a catastrophic coverage benefit to Medicare, to take effect in 1990. In July 1989, the Congressional Budget Office (CBO) doubled its cost estimate for the program, for the four-year period 1990-1993, from $5.7 billion to $11.8 billion. CBO explained that it had received newer data showing it had significantly under-estimated prescription drug cost growth, and it warned Congress that even this revised estimate might be too low. This was a principal reason Congress repealed the program before it could take effect.

SCHIP. In 1997, Congress established the State Children’s Health Insurance Program as a capped grant program to states, and appropriated $40 billion to be doled out to states over 10 years at a rate of roughly $5 billion per year, once implemented. In each year, some states exceeded their allotments, requiring shifts of funds from other states that had not done so. By 2006, unspent reserves from prior years were nearly exhausted. To avert mass disenrollments, Congress decided to appropriate an additional $283 million in FY 2006 and an additional $650 million in FY 2007.

From Hot Air,

Yesterday, Barack Obama told the nation that he was tired of dishonest debate and “scare tactics,” but how honest was Obama himself in last night’s speech?  The Associated Press fact-checks Obama and finds him … wanting.  For a man eager to paint his opposition as liars, Obama told a couple of whoppers himself in front of the joint session of Congress:

OBAMA: “I will not sign a plan that adds one dime to our deficits either now or in the future. Period.”

THE FACTS: Though there’s no final plan yet, the White House and congressional Democrats already have shown they’re ready to skirt the no-new-deficits pledge.

House Democrats offered a bill that the Congressional Budget Office said would add $220 billion to the deficit over 10 years. But Democrats and Obama administration officials claimed the bill actually was deficit-neutral. They said they simply didn’t have to count $245 billion of it — the cost of adjusting Medicare reimbursement rates so physicians don’t face big annual pay cuts. …

CBO Director Douglas Elmendorf had this to say in July: “We do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount.”

In fact, none of the proposals that have come from Congress thus far have been scored deficit neutral by any credible analytical group.  Obama tried arguing again last night that preventive medicine would save the system money, and therefore would render the system deficit neutral or even cost-effective in the long run.  Obama has yet to explain the scope of the “long run” argument, and in any event, the AP notes that the CBO has already blown the whistle on this argument, too:

THE FACTS: Studies have shown that much preventive care — particularly tests like the ones Obama mentions — actually costs money instead of saving it. That’s because detecting acute diseases like breast cancer in their early stages involves testing many people who would never end up developing the disease. The costs of a large number of tests, even if they’re relatively cheap, will outweigh the costs of caring for the minority of people who would have ended up getting sick without the testing.

The Congressional Budget Office wrote in August: “The evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall.”

I wrote a column regarding this finding a month ago today.  This has been known for several weeks, explained thoroughly by the CBO in its letter, based on well-known, peer-reviewed studies.  Cost savings from a massive application of preventive medicine is a myth — or in Obama’s parlance, a lie.  Yet Obama insists on telling it over and over again to get people to believe that he can save money by spending more of it.

The AP misses a couple of whoppers, too.  For instance, while they scold Obama for reversing himself on individual mandates, they let this pass without challenge in their article:

“To force people to get health insurance, you’ve got to have a very harsh penalty,” he said in a February 2008 debate.

Now, he says, “individuals will be required to carry basic health insurance — just as most states require you to carry auto insurance.”

This analogy is false for a few reasons.  States only require people to carry auto insurance if they drive on public roads.  It is a prerequisite of accessing a state-run system, not a mandate disconnected from any government-provided service.  Also, the mandate for auto insurance in most states is for liability insurance — insurance that pays for the damage done to other people, not to one’s self.  It’s to make sure that people who suffer damages from auto accidents not their fault can recover compensation for them.

They really miss the boat on illegal immigration, though:

OBAMA: “The reforms I’m proposing would not apply to those who are here illegally.” One congressman, South Carolina Republican Joe Wilson, shouted “You lie!” from his seat in the House chamber when Obama made this assertion. Wilson later apologized.

THE FACTS: The facts back up Obama. The House version of the health care bill explicitly prohibits spending any federal money to help illegal immigrants get health care coverage. Illegal immigrants could buy private health insurance, as many do now, but wouldn’t get tax subsidies to help them. Still, Republicans say there are not sufficient citizenship verification requirements to ensure illegal immigrants are excluded from benefits they are not due.

Actually, the facts do not back up Obama, as the Congressional Research Service noted in its analysis of HR3200.  The CRS is not run by Republicans, but is the nonpartisan research office that reports to Congress.  Illegal aliens in the US who meet the “substantial presence” test would be required to participate in the health-care “exchanges” and would have access therefore to the subsidies and the public option, if it exists in the final form of the bill (page 4):

Under H.R. 3200, all legal permanent residents (LPRs),23 nonimmigrants, and unauthorized aliens who meet the substantial presence test (defined above) would be required to obtain health insurance. Noncitizens meeting the definition of nonresident aliens (e.g., temporary visitors, temporary workers in the United States for less than 183 days in the year) would not be required to obtain health insurance. Notably, the IRC does not contain special rules for individuals who are in the United States without authorization (i.e., illegal or unauthorized aliens). Instead, the IRC treats these individuals in the same manner as other foreign nationals—an unauthorized individual who has been in the United States long enough to qualify under the substantial presence test is classified as a resident alien; otherwise, the individual is classified as a nonresident alien. Thus, it would appear that unauthorized aliens who meet the substantial presence test would be required under H.R. 3200 to have health insurance.

Since the CRS analysis has been public for almost two weeks, the AP reporters should have familiarized themselves with it. The bill offered by the House, which Obama seems to have re-embraced last night, would require illegal aliens in the country for more than six months to obtain health insurance through the exchanges, and make them eligible for the public option. Furthermore, when Republicans attempted to close that loophole with an amendment, Democrats shot it down.

If Obama really wants to make a reputation for himself as a mythbuster, he should start with himself.

From The Foundry at Heritage.org,

“Over the course of the health care debate, the bloggers at Verum Serum have done a true service to the cause of honesty in public discourse by posting video after video of liberal politicians and intellectuals all admitting that, despite his claims otherwise, President Barack Obama’s public option is designed for the sole purpose of being a Trojan Horse for government-run single payer health care. Now Verum Serum has edited all their public option videos into one clip. So the next time an Obamacare supporter tries to tell you that the public option is all about “choice and competition”, respond with this:”