The PJ Tatler

CBO Underestimated ObamaCare's Cost By As Much As $50 Billion Per Year

The CBO didn’t make a mistake here. They just did as they were told by the Obama administration, which produced a giant lie.

Federal payments required by President Barack Obama’s health care law are being understated by as much as $50 billion per year because official budget forecasts ignore the cost of insuring many employees’ spouses and children, according to a new analysis. The result could cost the U.S. Treasury hundreds of billions of dollars during the first ten years of the new health care law’s implementation.

“The Congressional Budget Office has never done a cost-estimate of this [because] they were expressly told to do their modeling on single [person] coverage,” said Richard Burkhauser in a telephone interview Monday. Burkhauser is an economist who teaches in Cornell University’s department of policy analysis and management. On Monday the National Bureau of Economic Research published a working paper on the subject that Burkhauser co-authored with colleagues from Cornell and Indiana University.

Employees and employers can use the rules to their own advantage, he said.  “A very large number of workers” will be able to apply for federal subsidies, “dramatically increasing the cost” of the law, he said.

In May a congressional committee set the accounting rules that determine who will qualify for federal health care subsidies under the 2010 Patient Protection and Affordable Care Act. When the committee handed down the rules to the Congressional Budget Office, its formula excluded the health care costs of millions of workers’ spouses and children. The result was a final estimate for 2010 that hides those costs.

And all of that will add to the deficit, naturally. And the after-the-fact ruling to force insurers to cover birth control without co-pays will drive insurance rates up, pricing some out of the market. That will drive additional numbers toward the government subsidies, too.

ObamaCare may turn out to be the second greatest hoax perpetrated in modern times (the greatest being global warming).

[A]n employee can ask his employer to raise the price of company-provided insurance in exchange for an equal increase in salary. In many cases, that would boost the share of his income spent on health insuranceto a percentage above the 9.5 percent threshold.

Such an arrangement, Burkhauser added, would make the employee, his spouse, and his children all eligible for federal health care subsidies while enriching both employer and employee — even after the Treasury Department collects fines from U.S. workers.

Burkhauser’s research found that because of the law’s incentives, an extra one-sixth of workers who get their health insurance from employers — or roughly an additional 12.7 percent of all workers — would gain by transfering themselves and their families into the federal exchanges.

Current projections suggest 75 percent of all employees will avoid the federal subsidies and stay in employer-backed health insurance plans. Burkhauser’s estimate, however, suggests that only about 65 percent of employees would have an adequate incentive to remain in privately funded health plans.

The May 4 federal health care rule ignored these incentives, he said, causing the CBO to underestimate the cost of Obama’s program by as much as $50 billion per year. If subsidy costs were to remain consistent, the ten-year total would be $500 billion; the government would likely recoup some of that in noncompliance penalties.

That’s the individual mandate at work, forcing some to pay for the health care of others at the point of a gun, and thanks to the kinks in the law that the Democrats passed so we could all find out what’s in it, some of those recipients will actually end up getting richer while getting tied permanently to more federal spending. It’s a beautiful scheme if the goal was to weaken private insurance and bind more Americans to dependence on government largesse.