Yesterday afternoon, the Director of the Congressional Budget Office, Douglas W. Elmendorf (whose bio can be found here), posted on his blog that “the federal budget is on an unsustainable path”. This information was relayed to the US Senate through direct testimony to the Senate Budget Committee. You can find the whole post here.
But central to the testimony is the following chart which shows Federal Debt as a percentage of GDP:
Keeping deficits and debt from reaching these levels would require increasing revenues significantly as a share of GDP, decreasing projected spending sharply, or some combination of the two.
His comments on the two existing Government Health Care plans for the General population – Medicaid & Medicare – are particularly enlightening:
For decades, spending on Medicare and Medicaid has been growing faster than the economy…
In CBO’s estimates, the increase in spending for Medicare and Medicaid will account for 80 percent of spending increases for the three entitlement programs [Medicaid, Medicare, and Social Security] between now and 2035…
In other words, the Government’s existing health care plans have been growing too fast, which clearly leads to asking how anyone can believe that adding a third “public option” would decrease healthcare costs (short of rationing, of course).
So a simple question, given that under current law, the budget is unsustainable, how can adding $1-2 trillion to cover ~8 million chronically uninsured Americans and adding $1-2 trillion for cap-and-trade and increasing taxes on wealth generation and spending another $1 trillion on a second “stimulus” make the budget any more sustainable?
Charlie,
A lot of folks think the for profit Wall Street dominated health insurance industry has hijacked healthcare in America. Now, desparate passengers on Flight 93, we are getting out of our seats to take them down. Let’s roll! Okay, maybe that’s a little dramatic.
Regarding -”In other words, the Government’s existing health care plans have been growing too fast”.
My understanding is the “plans” have not been growing any faster than our population of aging and poor. It’s the cost of healthcare that is growing too fast.
We don’t say a families food buget is growing too fast, when it’s the price of groceries that triples every ten years.
Medicare and medicaid does not employ doctors or operate hospitals. They collect money to pay bills presented by private sector healthcare providers. Our public, government administered insurance programs are notorious for squeezing prices down. Hence the constant complaints from providers. The Government gets the best prices by far. Imagine if Medicare and Medicaid paid the same fees as private insurers.
The whole idea of another public insurance option is to gain more leverage to negotiate prices down. And maybe recover some of that 35% of our private premium dollars being skimmed off the top by the Wall Street for profit insurance companies.
What a deal for private insurance. Sell us something we are forced to purchase or we die, skim off the cream, double prices every seven years, raise deductibles, cut payouts, deny preexisting conditions, then claim the government is trying to ruin things. Makes you wanna cry.
It’s a mess for sure, but the President, the CBO, all involved agree the whole deal is “unsustainable”. We are in the process of trying things that will change the equation here. Break the status quo. Reinvent what is unsustainable. What could be more American than revolutionizing things?
As I recall the last big idea for healthcare reform was private accounts. Whereas working families could take some of that extra money from their paychecks, put it in a tidy account, then buy a high deductible catastrophic policy with a $5000 deductible. When they needed to have a $500 checkup, or the kid broke an arm they could tap that pile of cash they saved up. That was many years ago? Premiums have doubled since the passage of that reform? I say let this newly elected Government try to reinvent things.
Well Joe Biden says we have to spend to get out of debt. However for those of us who live on planet Earth we know that doesn’t work. It especially doesn’t work when you spend other peoples money. Think of our government as a non-profit that works of donations (taxes) from the citizens. Would you continue to give donations to a non-profit whose costs are continually expanding and who have already spent more than what it takes in? What if that non-profit quadrupled its debt in less than a year. What if that same non-profit vowed to not only to continue spending but to increase it by 78% in the next year. Would you continue to donate? I wouldn’t.
CBO has been historically wrong about its long-term estimates. That is to say, their ability to see out a decade or more is no better than anybody else.
In the 1990s CBO had to revise their projections every quarter to account for growth (and Federal revenue) they didn’t see coming. I fully expect the same thing to happen after the surge of stimulus spending.
Also, the projections in this graph assume policy makers and voters will be stupid enough to continue on a failing path for decades. The health care cost projections make the case for single-payer with cost controls.
Hey Bill:
I’m just reporting what the CBO Director said. You can make all sorts of claims and statements. The facts are what they are. The CBO Director, hired by the Democrats in Congress, said yesterday that the budget under current law is not sustainable.
As for High Deductible plans? I’m on one. I like it a lot, and I don’t get any tax advantages from it like an employee does. Employees get a pre-tax account to save for the deductible. An owner does not. That being said, I’d rather pay a high deductible to the doctor than pay a health insurance provider the same money.
noman:
“single-payer with cost controls” — you mean rationing. And as to their forecasts, you’re right about their inaccuracy. They have always underestimated the costs.
Mr. Elmondorf may have just signed his “pink slip” with this statement. Truth has a way of angering those who choose not to seek it. Works along the lines of those who do not seek open govenrment.
Bye Doug!
Noman:
The CBO has historically been very conservative with their estimates. In 1966 when Medicare was conceived its cost was $3 billion a years and “conservative” estimates projected that the cost would be $12 billion per year by 1990. In 1990 Medicare costs were 9 times that “conservative” estimate, topping out at over $107 billion annually.
“Also, the projections in this graph assume policy makers and voters will be stupid enough to continue on a failing path for decades. ” – Because they’ve shown ANY ability to change failing policies? We’re going on at least 10 years and some would argue 6 or 7 decades of radical spending on any number of things, some necessary and most not. Pardon me if I don’t trust the “policy makers” to spend money wisely. And Pardon me but didn’t all these voters just elect a group of legislators and a President that are spending money like a shopaholic with a no limit credit card at the Mall of America?
“single-payer with cost controls” — you mean rationing.
Yup – rationing of insurance company and pharma profits.
“single-payer with cost controls” — you mean rationing.
Yup – rationing of insurance company and pharma windfalls.
As for High Deductible plans? I’m on one. I like it a lot
No comparison Charlie, we can’t all manage our finances as if we were Charlie Copeland.
Because they’ve shown ANY ability to change failing policies?
Yes of course… in 1990 after 12 years of Republican administrations, CBO projected deficits as far as the eye could see… 8 years later we had a balanced budget.
As the Cato Institute says, Don’t Trust The CBO’s Numbers:
noman:
““single-payer with cost controls” — you mean rationing.
Yup – rationing of insurance company and pharma profits.”
1.) The rationing that will occur is the one that decides what costs are too expensive for the national interests. Look at Europe where rationing bodies deny cancer treatments based on cost.
2.) Those profits that you describe were roughly $16.2 billion in 2008 for the top 3 insurance providers combined: United Healthcare($4.6B), AIG($6.2B), and State Farm($5.4B)
For the top 3 Pharma companies profits were $29 billion: Johnson and Johnson ($10.5B), Proctor & Gamble($10.3B) and Pfizer ($8.2B)
Now,
For the top 3 tech companies were $46.6 billion:
General Electric($22.2B), Microsoft($14B) and IBM($10.4B)
Noman:
“As for High Deductible plans? I’m on one. I like it a lot
No comparison Charlie, we can’t all manage our finances as if we were Charlie Copeland.”
No, but there are other choices out there. For people that can afford Charlie’s plan should be allowed to choose it. There are low deductable plans out there as well.
“Because they’ve shown ANY ability to change failing policies?
Yes of course… in 1990 after 12 years of Republican administrations, CBO projected deficits as far as the eye could see… 8 years later we had a balanced budget.”
The Clinton years were full of the same “Creative Accounting” practices that got Fannie and Freddie and the rest of the banks in trouble. In fact, they brought us Fannie and Freddie.
“As the Cato Institute says, Don’t Trust The CBO’s Numbers:
CBO errors always tilt in a specific direction. Aside from the first year of recessions, the CBO always exaggerates future budget deficits and underestimates surpluses. ”
Leave it to someone arguing the liberal position to point out the only fact in the study that supports their conclusion AND to pick a study that relates directly to one aspect. Budget DEFICITS and not spending amounts on projects. It’s very conservative in it’s estimates of the costs of projects.
Charlie: I get it. Fact is, I don’t see too much of anything that is “sustainable” out there. I’m running on sheer American optimism here.
noman:
“we can’t all manage our finances as if we were Charlie Copeland.” Your standard leftwing bigotry and ignorance. I do pity you when you get stuck resorting to personal attacks. Certainly easier for you than actually having something additive to say.
HSA’s are offered by many companies and even some governments. The employer can pay the insurance company a high premium or they can put the same money into an employee’s pre-tax HSA account and the employee uses it directly to control health insurance spending (and save money tax free for retirement). Once the deductible is expended, healthcare is covered at 100%. Like I said, I use it and I like it. However, federal tax treatment doesn’t allow me the pre-tax benefit. Still I’d rather control my healthcare spending. That has nothing to do with “finances”, just choice and liberty.
HSA regulations should be reduced so that HSA use can be expanded, but the left doesn’t actually want people to control their own lives. However, once again, you comment on something with which you demonstrate no real firsthand knowledge (which is why you default to personal attacks, but hey, if it makes you feel better to tear down rather than build up, I just have pity for you.)
Charlie, your argument for expanding HSA was going great until you tossed in “the left doesn’t actually want people to control their own lives”. Where do you get that crap? From FOX News?
Cold War over. Commies gone. This is America. Nobody out to control us, except maybe Microsoft and The Google.
Speaking of controlling people, they say 7% of marriages last year were done for health insurance. 35% of Americans say career choices are dependent on health insurance. Opportunities for self employment severely limited by health insurance costs. Want Americans to have more control over their lives? Universal, transportable, single payer, cradle to grave pubic health insurance. Unlock the ball and chain American workers drag around. Talk about extending the blessings of liberty.
Bill:
That’s a very naive argument. Just because Nikita Krushchev is gone does not mean Communism is. It’s alive and well just rebranded with elements of Capitalism in both Russia and China as well as in other nations that do not like us very much. I used to think no American wanted to control any other American too until I looked at the Socialist agenda being played out before our eyes.
Cap & Trade: Government control of personal and business emissions. The only way around it is paying the extortion rate that the government chooses by way of the government controlling the market the carbon credits are traded on. Let’s not forget the ban on incandescent lightbulbs and mandates on auto emissions. Oh yea, I can see where the government is all in favor of my right to choose.
Government Spending: I’m sorry, I’m no “Macroeconomist” but I am a thinker and in my cozy little world spending more money when your bankrupt doesn’t make you richer. Instead it puts you further in debt. Apparently under the governments new rule you have to “spend more money to get out of bankruptcy”. We’re not even talking about real “Stimulus” spending where you create jobs with projects like Highways, bridge repair and other infrastructure needs but instead hundreds of billions in handouts to all sorts of liberal contributors. Protests on April 15th, and about once a month every month nationwide have done nothing to convince the government that the people really are NOT on board with their radical agenda. Oh yea, I can see where the government is all for spending my tax money responsibly.
Universal Healthcare:
“Speaking of controlling people, they say 7% of marriages last year were done for health insurance. 35% of Americans say career choices are dependent on health insurance. Opportunities for self employment severely limited by health insurance costs.”
Assuming facts not referenced are true I would counter that this makes a case for removing the employer provided healthcare mandate system we have now. My boss isn’t responsible for ensuring I have a home and a car so why do they need to provide me health insurance? Let every American have their individual choice in how to spend their healthcare dollars.
“Want Americans to have more control over their lives? Universal, transportable, single payer, cradle to grave pubic health insurance. Unlock the ball and chain American workers drag around. Talk about extending the blessings of liberty.”
This is perhaps the most ridiculous argument for UHC ever. It’s an attempt to secure liberty through addition by subtraction. You can’t add liberty by removing freedom of choice and competition. It kills an entire market of the economy, costs us thousands of jobs and puts everyone’s healthcare under the control of the government. Think single-payer is any different than socialized medicine? Let’s ask Canadians who flood across the border for treatments because appointments with specialist doctors in Canada run about 3-6 months out IF you can afford the extra premiums. Let’s ask them about their VAT taxes in Canada which are as low as 5% and as high as 15% on their own, progressive payroll taxes that punish success by taxing those making over 120k up to 40%. Not to mention Canadian sin taxes and other taxes imposed. Let’s talk about their wonderful “free” medical care. Most provinces require you to pay on top of the close to 55% taxation a Healthcare Premium which is again, punishing success by charging the rich at a much higher rate. On top of that “Premium” most provinces require some form of personal drug coverage or other personal health insurance to supplement the public plan.
Talk about a ball and chain. Canadians when it’s all said and done get to keep about 30 to 40 percent of their income if they make over 80k per year. That’s not even to mention that putting government in charge of healthcare just gives them control over what medical decisions you and your doctor make and how your care is given. Check out the following sources and I suggest reevaluating your thinking:
http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html
http://en.wikipedia.org/wiki/Health_care_in_Canada
The following link for full disclosure is my own blog but I wrote an article on the subject of Canadian style healthcare including all of my above citations and more back in June. It’s chock full of interesting things you probably haven’t heard about “single-payer” care:
http://deconservative.blogtownhall.com/2009/06/17/argument_against_canadian_style_universal_healthcare.thtml
Bill: I agree that we should have universal access to transportable health insurance. Single payer equals monopoly. Tell me a single monopoly that has ever worked? HSA’s can be universal if the law were changed, and they are transportable. Done.
“They say” — Are you talking about the Van Patten family? Otherwise, not sure who “They” are…
Charlie: They be the Kaiser Foundation. “In April, a poll conducted by the Kaiser Family Foundation, a leading health policy research group, found that in the past year 7 percent of U.S. adults married so one or the other could get on a partner’s health insurance plan.”
C’mon, do you really have any doubt about marriage and careers being influenced by employer based health insurance? It’s a modern day serf lord relationship.
Private corporations shouldn’t exercise that kind of life and death control over American workers. We should be free to walk away from our corporate cubicles without fear of losing access to good medical care. Government control is one thing. At least we elect our government.
Evan:
Krushchev is dead? That’s what they want us to believe I’m sure.
Since you have a penchant for insults, let me respond by saying your argument is naive ridiculous, paranoid, plain stupid, and well . . . a bit goofy.
You’re worried about being “controlled” but don’t mind being brainwashed by Wall Street health insurance corporations. Very interesting.
Here’s the truth about Canada:
The 2009 Canadian Press Harris-Decima survey suggests 82 per cent of Canadians believe the Canadian system is better than U.S. health care.
The poll also suggests 70 per cent of Canadians think their health-care system is working well or very well, while the remainder feel the system is either not working well or not working well at all.
Quebec residents were most split, with 52 per cent saying the system works well and 43 per cent saying it doesn’t.
Canadians were also divided over how much of their system should be publicly funded and how much should be private.
Fifty-five per cent thought it should be more public, only 12 per cent thought it should be private, and the rest thought Canada has struck the right balance between the two options.
The telephone poll of 1,000 Canadians was conducted from June 4 to 8, and has a margin of error of plus or minus 3.1 percentage points, 19 times out of 20.
There are no flocks of Canadians coming to the US. You must be thinking of Canadian geese. It’s all a BIG LIE about Canada having a bad public system.
33 million Canadians have public health insurance. Canada has a very conservative prime minister. Any proposals to scrap public insurance? No. Why. They love it. It’s not socialism, not communism, it just a health insurance system for God’s sake.
The Wall Street insurance boys want to keep things the way they are now. That’s why they publish lies about Canada. They sell us something we absolutely have to purchase, double the price every seven years, then tell you the President is trying to ruin things.
Aww Bill, did the word naive offend you? I’m sorry but I just have a really hard time buying all the bull here. You are apparently one of those who believes in some big “Bildderberg” corporation controlling everything. No one here is brainwashed by the insurance companies and they are not innocent. That being said, government regulations, refusal to limit malpractice suits and Medicare/Medicaid are bigger culprits.
The insurance companies should be doing some things like transitioning to a paperless system, creating a single insurance form and competing across state lines.
The government has to get out of the way by reducing it’s Medicare/Medicaid rolls and releasing them back into the private system as costs go down, removing the fear of the justice system bankrupting doctors thereby causing them to pay hundreds of thousands of dollars in malpractice coverage premiums and by allowing transport of medical plans across state lines.
Your argument appears to be that they only way we get that open transport of coverage is if the government is in control of it. Why is that? Why are you so comfortable letting a government that has bankrupted Social Security, Medicare, Medicaid and the National Highway Trust Fund and continues to spend money like a shopaholic with a Black Card in the Mall of America?
Again you lack the citations for your facts and so I will provide some cited facts:
The following Gallup Poll shows that most Americans are satisfied with their care specifically at the bottom where the question becomes how you would rate your overall healthcare experience and 70% rate it Good or Exellent and another 15 percent call it Fair
http://www.gallup.com/poll/102934/majority-americans-satisfied-their-own-healthcare.aspx
The following poll refutes your claims about Canadian Healthcare:
http://www.gallup.com/poll/8056/healthcare-system-ratings-us-great-britain-canada.aspx
The following facts are cited from here: http://www.jsonline.com/blogs/news/41781642.html
Take cancer, for instance. You’re more likely to die of it in Germany than the United States – 52% more likely, if it’s breast cancer. If it’s prostate cancer, you’re 600% more likely to die of it in Britain than here. You’re more likely to die of both, or of colon cancer, just to pick a few major hits, in Canada than here.
That’s because you’ll get screened here. For those who say we need nationalized “universal” care to improve prevention, try this:
“ Nine of 10 middle-aged American women (89 percent) have had a mammogram, compared to less than three-fourths of Canadians (72 percent).”
“Nearly all American women (96 percent) have had a pap smear, compared to less than 90 percent of Canadians.”
“More than half of American men (54 percent) have had a PSA test, compared to less than 1 in 6 Canadians (16 percent).”
“Nearly one-third of Americans (30 percent) have had a colonoscopy, compared with less than 1 in 20 Canadians (5 percent).”
“When asked about their own health care instead of the “health care system,” more than half of Americans (51.3 percent) are very satisfied with their health care services, compared to only 41.5 percent of Canadians; a lower proportion of Americans are dissatisfied (6.8 percent) than Canadians (8.5 percent).”
like transitioning to a paperless system, creating a single insurance form and competing across state lines.
If you like what that deregulatory model did for the banks, you’ll love what it does for health care. No matter what state you live in, any insurance company can just download your “health score” and they can all quote you the same insurance premium, all with the same amount of padding built in to protec their share price. If you want a cheaper premium there is always junk insurance.
noman:
You think it was DEREGULATION that led to the banks? Actually it was more like the wrong kind of EXCESSIVE regulation. Sarbanes-Oxley accounting focused on assessing every aspect of a company’s business down to defining computer account practices and ensuring that air conditioning and sprinklers were in proper working order. Sure that’s all important stuff but is it really the governments job to mandate that?
Mark to Market accounting practices that both sides were equally guilty of pushing through in 2000 actually made it more costly but easier for companies to hide future losses by reevaluating their worth more often and in a different way than had been done previously.
Meanwhile they left open the “creative accounting” made popular by the Clinton Administration. In fact, may I point out that you have the CRA, Fannie Mae, and Freddie Mac involved in the markets and groups like ACORN pressing banks and other insitutions to make these risky loans and create the credit default swaps that got us into this mess.
noman:
And your alternative is to let a government bureaucrat decide if the treatments for your specific cancer type are cost effective? Honestly I’d RATHER have the mythical scores from your ridiculous scenario than government control.
Fact 1) The World Health Organization report on healthcare rated the US the most responsive system in the world.
Fact 2) Only ~8 million Americans are chronically uninsured.
Fact 3) The CBO’s Director has stated that under CURRENT law, the Country’s budget is unsustainable.
Given these three facts, those on the left who are arguing for destroying the current system for a government-run monopoly are clearly driven by ideology — because the facts don’t justify their extreme position.
And your alternative is to let a government bureaucrat decide if the treatments for your specific cancer type are cost effective?
Government is the only force capable of expelling the Wall Street bureaucrats who now decide. That is exactly the protective role I expect from government to assure my liberty.
Honestly I’d RATHER have the mythical scores from your ridiculous scenario than government control.
Ridiculous scenario? You live in a fantasy world, my friend. The bureau already exists and is used to fix prices and deny health insurance, just like credit bureaus.
According recent polls by ABC Washington Post Kaiser Family Foundation HHS Health and Human Services – Americans are far more satisfied with government health insurance (Medicare) that with private Wall Street oriented health insurance.
There is a massive collection of data comparisons of how patients experience and rate Medicare, Medicaid and private insurance.
http://www.nationaljournal.com/njonline/mp_20090629_2600.php
Those comparisons show the depth of Medicare’s popularity. According to a national CAHPS survey conducted by the Centers for Medicare and Medicaid Services in 2007, 56 percent of enrollees in traditional fee-for-service Medicare give their “health plan” a rating of 9 or 10 on a 0-10 scale. Similarly, 60 percent of seniors enrolled in Medicare Managed Care rated their plans a 9 or 10. But according to the CAHPS surveys compiled by HHS, only 40 percent of Americans enrolled in private health insurance gave their plans a 9 or 10 rating.
Bill:
Here we go again with more factually incorrect nonsense. First, these polls were taken of people who have experienced only one version. For instance people on Medicaid would of course feel more comfortable with it than people on Private Insurance. The slant of this particular article is so obviously left it’s sickening. I’m sorry but I can’t trust any poll done by a major news media (including Fox) because I’ve seen the bias they represent. As you can see on the Kaiser poll Americans reject he idea of single payer/government run healthcare. See what these polls do is create a scenario that does not exist. There is no magic government “created” plan that will compete with private plans because the government does not compete. It sets prices it does not “fail” because it can generate more revenue (i.e. raise taxes/fees) whenever it wants.
Stop trying to lie to everyone with this nonsensical argument about a plan that cannot exist. Also, if the people on Medicare/Medicaid were shown how much “extra care” they receive or how many times they are perscribed drugs to “slow down” or “delay” symptoms instead of fixing them they would not feel so positive about it. Be honest in your commentary.