Ever heard the saying that if it’s too good to be true, then it’s probably not true? That’s exactly how I felt when I first read about the cost projections for the health care reform legislation.
Let’s see…it expands coverage to an additional 32 million people, provides subsidies for entire new classes of individuals…and yet it lowers the deficit by $143 billion over the first 10 years. What a neat trick! Especially since the bill is projected to cost $940 billion dollars in the first 10 years.
So how, exactly, can a bill cost that much but still lower the deficit? Well, for starters, the bill includes $438 billion dollars in new taxes. (Funny how it wasn’t promoted as a massive tax increase, when in fact, that’s exactly what it was.) The rest of the “savings” will supposedly come from $500 billion in savings from the Medicare program. I guess I will believe that when I see it.
But getting back to the costs… the bill is projected to cost $940 billion dollars. So how has the government done in the past when projecting the future cost of health care programs? Some examples:
In 1965, when Congress established a national Medicare program, the House Ways and Means Committee estimated that the hospital insurance portion (Part A) would cost about $9 billion annually by 1990. Good guess! But the actual cost for Part A in 1990 was $67 billion. Oops! Seems as though the costs were 740% higher than the projections.
In 1967, just after Medicare Part B was added, the House Ways and Means Committee predicted it would cost about $12 billion in 1990. Actual costs in 1990? $110 billion! Double oops! Missed it by almost 1,000% that time.
Multiple additional examples abound.
So fast forward 10 or 20 years. Where will we be if the costs estimates for this bill are as underestimated as they have been for previous health care bills? In other words, what if instead of almost 1 trillion dollars, the bill ends up costing almost $10 trillion in its first 10 years? Or more?
It sounds crazy until you consider the track record. And if that happens, instead of lowering the deficits, this bill would explode the deficits beyond imagination.
Again, health care reform is needed. But this bill does almost nothing to contain health care costs…which is the primary problem. And…you read it here first…unless this bill is altered, the deficits is runs up will strangle this country’s budget for the foreseeable future.
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