The cost of Medicare is a good place to begin. At its start, in 1966, Medicare cost $3 billion.

The House Ways and Means Committee estimated that Medicare would cost only about $12 billion by 1990 (a figure that included an allowance for inflation). This was a supposedly “conservative” estimate.

But in 1990 Medicare actually cost $107 billion

Democrats and the CBO’s ObamaCare numbers

American Thinker – Yossi Gestetner

During ObamaCare debates, past and present, Democrats point to the estimates of the Congressional Budget office which show that enacting Health Care Reform gives the U.S. $143 billion in savings over the first ten years (starting in early 2010), and repealing ObamaCare would ‘wipe-out’ these very savings.

The crucial thing to understand is that the CBO is just a calculator: It only adds and subtracts the numbers Congress gives it. For example, a bill — to be called ObamaCare — that has $857 billion in expenses over the first ten years; approximately $500 billion in tax increases, in addition to approximately $500 billion in Medicare cuts over the same period, will give you a savings of $143 billion. This is what the CBO tells you. However, the CBO will not be there to make sure that the planned Medicare cuts indeed take place or that the tax increases will be enacted.

Therefore, Democrats are ignorant about the workings of the CBO or are — more likely — blatantly misleading the public when they point to the CBO’ estimates of costs and ‘savings.’ These very Democrats voted multiple times — after ObamaCare passed — to push back until 2012 the 21% cut in pay for Medicare doctors which, according to ObamaCare, should have taken place in early 2010.

The initial goal of letting the 21% cut take place was one of ObamaCare’s money saving moves ($15 billion annually, according to this Reuters report). However, these ‘savings’ (approximately $150 billion over ten years if the cuts never takes place), were dumped off the bus as a step one to go around ObamaCare, yet Democrats still wave the $143 billion in ‘saving’ that the law will bring over the first ten years starting a year ago.

The 21% cut that was pushed back for a total of two years (thus $30 billion in savings is already gone), is just one of many Medicare cuts that ObamaCare will not be able to follow through, certainly not for extended periods of time, as estimated by the Medicare Actuary; you know, the guy who actually does analyze what cuts can or cannot take place in Medicare, and does not just glaze at the numbers as the CBO does as a Texas Instrument device of thirty years ago.

For good reason did Medicare, as of now, land up to cost 9 times — or whatever exact amount — more than what the CBO estimated back in the 1960’s. Simple, the CBO is a calculator; not an enforcer.

Additional Information on CBO’s Preliminary Analysis of H.R. 2

CBO Director’s Blog

CBO and the staff of the Joint Committee on Taxation (JCT) have not yet developed a detailed estimate of the budgetary impact of H.R. 2, the Repealing the Job-Killing Health Care Law Act, which would repeal the major health care legislation enacted in March 2010.

Yesterday, we released a preliminary analysis of that legislation indicating that, over the 2012-2021 period, the effect of enacting H.R. 2 on the federal budget as a result of changes in direct spending and revenues is likely to be an increase in deficits in the vicinity of $230 billion, plus or minus the effects of forthcoming technical and economic changes to CBO’s and JCT’s projections for that period.

We have been asked to provide the revenue and direct spending components of that total. Extrapolating the estimated budgetary effects of the original health care legislation and accounting for the effects of subsequent legislation, CBO anticipates that enacting H.R. 2 would probably yield, for the 2012-2021 period, a reduction in revenues in the neighborhood of $770 billion and a reduction in outlays in the vicinity of $540 billion, plus or minus the effects of forthcoming technical and economic changes to CBO’s and JCT’s projections.



Obamacare in Pictures

The Budgetary Consequences of the President’s Health Care Overhaul

The President’s health care law is a budget buster. Claims of deficit reduction exclude the $115 billion needed to implement the law. The score double-counts $521 billion from Social Security payroll taxes, CLASS Act premiums, and Medicare cuts. It strips a costly doc-fix provision that was included in initial score. It measures 10 years of revenues to offset 6 years of new spending. There is no question that the creation of a trillion dollar open-ended entitlement is a fiscal train wreck.

Democrats continue to distort the consequences of their budget-busting health-care overhaul. Claims of deficit reduction often cite figures from the Congressional Budget Office, which reported last year that despite $2.6 trillion in new spending, the legislation as written would reduce deficits by $143 billion over ten years.
Source: http://www.cbo.gov/ftpdocs/113xx/doc11379/AmendReconProp.pdf

To hide the true cost of their health-care overhaul, the Democrats loaded the overhaul with gimmicks and double-counting – and the CBO must score what is put in front of it. But once these gimmicks are accounted for, the bill would add over $700 billion in red ink over the next decade, as health-care costs send the debt spiraling out of control.

The CBO score did not include the cost of setting up and administering the massive overhaul, including the cost of hiring new health-care bureaucrats to run the new spending programs, as well as thousands of IRS agents to enforce the new mandates.

The new law double-counts an estimated $521 billion in alleged offsets:

The Democrats’ bill originally included the “doc fix” that CBO estimated would add $208 billion to the bill’s score. Democrats removed this provision to lower the bill’s CBO score, but promised doctors that they would enact the fix later, and did in fact pass a short-term prevention of cuts to physician payments last year, adding to the deficit.
Souce: http://www.cbo.gov/ftpdocs/113xx/doc11376/RyanLtrhr4872.pdf

Add it up – $115 billion in discretionary costs, plus $521 billion in double-counting, plus $208 billion for a long-term doc fix (minus the $143 billion of claimed savings) – and the law would add $701 billion to the deficit over the next ten years.

In addition to the smoke and mirrors used to hide the deficit impact of the trillions of dollars in new spending, the law creates a brand new open-ended health care entitlement that will – unless repealed – exacerbate the spiraling cost of health care, explode our deficit and debt, and forever alter the relationship between the government and the American people.

Setting the Record Straight

Democrats’ Health Care Law is a Fiscal Train Wreck

Our dispute is not with the hard-working, non-partisan professionals at the Congressional Budget Office. CBO scores what is put in front of them – and what Democrats put in front of them last year was legislation packed with smoke and mirrors to hide the impact of trillions of dollars in new spending.

Nothing has changed about the flawed assumptions underlying CBO’s score – only the dates have changed. Undoing the Democrats’ massive new entitlement is essential to our fiscal health.


Claim: In his letter to Speaker Boehner, CBO director Elmendorf writes that the Democrats’ new health care law “would reduce budget deficits over the 2010-2019 period and in subsequent years; consequently, we expect that repealing that legislation would increase budget deficits.”

Response: The same budget gimmicks that allowed the Democrats to get a CBO score last spring saying that their massive entitlement expansion would somehow reduce the deficit are still in place today.  Nothing has changed about the underlying legislation.

Claims of deficit reduction are still excluding the $115 billion needed to implement the law. The Democrats are still double-counting $521 billion from Social Security payroll taxes, CLASS Act premiums, and Medicare cuts. The score still doesn’t account for the costly “doc-fix” provision that Democrats stripped out of the bill and passed separately.

CBO’s score of the GOP’s promised repeal of the Democrats’ costly new law is still taking all of these gimmicks into account.  Just as we disagreed with the underlying assumptions used to score the original legislation, we disagree with the underlying assumptions used to score the repeal of that same legislation.  There’s no new math at play here.


Claim: But now CBO says that the Democrats’ new law will reduce deficits by even more than before — $230 billion as opposed to $145 billion.

Response: The original score was based on a 2010-2019 estimate.  The repeal is based on a 2012-2021 estimate.  Thus, the scoring window has been moved two years forward. CBO’s estimates for the years beyond 2019 are based on the same smoke-and-mirrors budgetary gimmicks that produced the initial estimate. Again, nothing has changed about the underlying flawed assumptions. Only the dates have changed.

While the out years contain more fake deficit reduction, they also contain very real spending increases as the bill’s new subsidies and its expansion of Medicaid to childless adults continue to generate enormous costs. Moving past 2019 begins to give us a clearer picture of the total 10-year price tag of the bill – it will almost certainly be larger than $1 trillion, and will likely be closer to $2.6 trillion once a full 10 years of new costs are taken into account.


Claim: You can’t pick and choose which CBO scores you agree with.

Response: CBO must score what’s put in front of them.  Our disagreement is not with the non-partisan professionals at CBO but with the Democrats who employed smoke-and-mirrors gimmicks to attain a score that would show a deficit reduction.


Labor Markets and Health Care Reform: New Results (PDF)

Obamacare: A Budget-Busting, Job-Killing Health Care Law (PDF)

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