Fun with Numbers: CBO Estimates from Wonderland
History shows that estimating the costs of a health care entitlement is a fool's errand.
March 19, 2010 - 12:00 am
The non-partisan Congressional Budget Office has released its “score” on the reconciliation fixes the House wants to pass and send along to the Senate. The exhausted green-eyeshade guys who have been slaving away these many months probably wish they were being paid by the hour, given the “100-hour weeks” that their boss, Doug Elmendorf, claims they’ve all been working to satisfy the Democrats and their ever-changing health care plans.
The raw numbers, on the surface, are being cheered on the Democratic side of the aisle. The combination Senate bill/reconciliation fixes clocks in at a “cost” of $940 billion over 10 years with a “savings” to the budget of $138 billion. The reason I have “cost” and “savings” in quotes is because the numbers are based on premises that only Lewis Carroll could love. For it appears that the CBO made a trip to Wonderland in order to come up with “costs” and “savings” that bear such little semblance to reality.
It’s been known for many months that the cost of the health care bill has been phoney baloney budgetary gimmicks. Most of the costs of the bill won’t kick in until 2013, while the bulk of the costs would be picked up in the next six years. A true cost of this bill over the first ten years (2013-2023) is well into the trillions of dollars.
CBO makes no apologies for basing their projections on what they acknowledge is tomfoolery. Nor do they seem to see it as their job to highlight this legislative legerdemain.
I guess that’s why they’re “non-partisan.” They cooperate in hoodwinking the American people with both parties.
There are other tricksies the Democrats are trying to get away with. Jacob Sullum of Reason’s Hit & Run highlights a few:
As before, those projections depend on Medicare cuts that, given Congress’ track record in this area, probably will not be sustained. Furthermore, the Democrats continue to double count Medicare savings, pretending to use them both to pay for insurance subsidies and to improve the program’s long-term financial condition. As our own Peter Suderman has noted, both the CBO and Medicare’s chief actuary have criticized this trick. Yet the talking points released this morning by House Majority Leader Steny Hoyer (D-Md.) claim the bill both “IS FULLY PAID FOR” and “EXTENDS THE SOLVENCY OF MEDICARE.”
And what about that part where the CBO guys took off their green eyeshades and put on rose-colored glasses to give us an estimate of $1.2 trillion in savings 20 years down the road? Not so fast says Sullum:
The changes in the reconciliation bill, it [CBO] says, would “further reduce federal budget deficits in that decade, with a total effect that is in a broad range between zero and one-quarter percent of GDP.” When the range of numbers in a projection includes zero, it seems fair to say the projection is not very helpful as a guide to policy decisions. Yet the Democrats have transformed these highly uncertain projections into a seemingly precise and reliable dollar figure: $1.2 trillion in deficit reduction during the second decade.
Sleight of hand, double counting, magical thinking — one would think we were talking about a Houdini memorabilia convention and not the most important piece of domestic legislation in more than a generation. But in service to saving Obama’s presidency, anything is allowable.
Besides, does anyone really believe the CBO has a handle on how much this Gargantua is going to cost? Or how much we’re going to save? Or how much it will cut the deficit 20 years from now?
History is an unforgiving vixen. What the past tells us about the future is that never in the history of entitlement spending have estimated costs ever come anywhere near the actual expenditures. And the further out the predictions, the more spectacularly inaccurate they become. This is especially true of health care entitlements, as this Washington Times article points out:
In 1965, the House Ways and Means Committee estimated that the hospital insurance program of Medicare — the federal health care program for the elderly and disabled — would cost $9 billion by 1990. The actual cost that year was $67 billion.
In 1967, the House Ways and Means Committee said the entire Medicare program would cost $12 billion in 1990. The actual cost in 1990 was $98 billion.
In 1987, Congress projected that Medicaid — the joint federal-state health care program for the poor – would make special relief payments to hospitals of less than $1 billion in 1992. Actual cost: $17 billion.
With a track record like that, why believe anyone who projects anything about any health care entitlement? The answer is those who want to believe, or need to believe, or are pressured to believe that the CBO’s numbers reflect reality have no choice. They have locked themselves into bringing this abomination into existence and projections be damned. They will do their utmost to give the president a legislative victory despite the fact that history is most assuredly going to make liars out of all of them.
Meanwhile, the cheering being done by health care reform proponents is bizarre. The bill will cut the deficit by $138 billion over 10 years, says the CBO. Meanwhile, that same organization predicted in August that the total federal deficit over that same period is going to be $7.14 trillion.
What happens if opponents are right and these CBO numbers bear no resemblance to reality? Obviously, ObamaCare will add substantially to an already preposterous deficit. And the trillions in actual spending that national health care will incur doesn’t include additional “fixes” that Congress will be forced to make once it becomes clear that reality has knocked those pretend CBO numbers into a cocked hat. Subsidies for citizens to buy insurance will almost certainly rise as the cost of premiums skyrocket — a fact of life in Massachusetts where mini-me ObamaCare has been the law since 2006 and projected costs are already way out of whack with actual expenditures.
None of this matters — not the CBO, not history, not the cautionary tale that is RomneyCare, and certainly not the warnings from responsible lawmakers, economists, health care professionals, and others who insist this bill will not do what Democrats claim it will do. The only thing that matters to the Democrats is achieving a triumph for President Obama. And if that means destroying the health care system, impoverishing future generations, and threatening the individual liberty of American citizens, so be it.
Power has its own logic. In this case, it is a logic glimpsed through a looking glass where up is down, black is white, and political whims are substituted for the will of the people.