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CBO ON ACA - An Expensive Half-Loaf
The Congressional Budget Office produced two reports on Obama Care yesterday. The first (A - Link) did an analysis of what the cost would be if we just junked the Affordable Care Act (ACA). The second (B - Link) looked at the consequences to ACA as a result of the recent Supreme Court decision. .
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The House has recently put forward a bill to scrap almost all of ACA. This legislation is not going anywhere, it’s just a “show pony” for Republicans, so they can say they voted to repeal an unpopular law. The CBO is required to review all legislation, even if if it has not a ghost of a chance of passing The CBO concluded that repeal would cost (increase deficit) by$109Bn over ten-years. This number assumes that government spending would actually decline by $890Bn, but the government would collect $1Trillion less in revenue.
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When Justice Roberts made his now famous opinion that affirmed the constitutionality of ACA, he also made two important changes. He said that the government could not force a citizen to pay a penalty, but it could levy a tax, and he said that States could not be forced to provide Medicaid to those who did not have health care insurance.
The decision by Roberts does change the economics of ACA. The CBO concluded that 4 million people would not have access to health coverage as a result of the Medicaid “opt out” that the States now have. The reduction in the number of people covered translate to “savings” that amount to $84Bn over ten years.
Of course this is not really saving anyone a dime. ACA is going to cost a bundle. Post the Supremes decision, the CBO has concluded that ACA will cost a net of $1,168Bn over ten years. ACA will have expenses of 1,683Bn but will generate revenues of $514Bn to produce that net cost of $1.2 Trillion.
So we are screwed if we get rid of ACA, we are screwed 10Xs worse if ACA is kept alive.
What do we get for the $1.2Tn? The answer the politicians will tell you is that the country will finally have universal health coverage for everyone. But that is not true at all. ACA does widen the access to healthcare to millions of additional people, but it falls well short of the stated goals.
The CBO has concluded that as a result of ACA, the number of people today who do not have access to healthcare will fall from 53m to 30m over the next ten years. While the 46% reduction in uninsured is admirable, it still is a far cry away from what this law has been sold as. America will still have 10% of its population uninsured.
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The CBO is only allowed to review “Current Law”. ACA must be reworked to reflect the ruling by Roberts that the government can’t charge a penalty for not participating in ACA. The Supremes determined that the penalties must be in the form of a tax for it to be legal. At some point, lawmakers have to get together and rework the critical language and convert what was once a “penalty” into a tax. I suspect that this is going to be a big problem post the November election.
It’s very important to look at who will be paying these penalties/taxes. The numbers are huge. The following looks at who is going to be paying to make ACA a reality:
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$172Bn (15% of the total cost) is coming from those “penalties” that somehow are going to be converted into a tax. I think the country will see just a fraction of this amount actually collected.
10% of the cost ($111Bn) will come from people who have “Cadillac” insurance plans. So if you’re working for a company that has good health plan today, get ready to pay some extra bucks.
Fully 20% ($231Bn) of the cost of ACA is coming from high-income earners. They will pay more income tax to subsidize the new law.
The bottom line on ACA is that it will increase the deficit by $1.3Tn, it results in tax increases of $514Bn and it covers less than half of the uninsured today. That is called success in Washington. Me? I call it a disaster.
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What are you, a 17year old kid on summer vacation? Employers are where most people get health insurance except for the parasite class who get Medicaid. Employers buy the insurance they can afford and to keep costs down insurers offer plans with high co-pays and or deductibles. Yeah people will use it... if they've got cancer or break their legs but will they pay $250 for a colonoscopy? Go to the emergency room if it costs them a $1000?
You must be talking copay. My last colonoscopy was closer to $6k.
Wait, are you talking about the IRS or a Doctor?
You don't have to pick a plan that includes office visits. Buy an affordable plan for the big stuff and cancel the plan at work. Your paying MORE for something you don't even use. It's hopeless really...
Government taxes are not tied to government expenditures. The tax increases from the ACA legislation are mutually exclusive of the new expenditures. They package these deals to make it seem like the money is being allocated to the grab bag of goodies. They are not. It's a tax increased. And now people must get insurance, lest suffer a penalty for not doing so. The government can always default on the expenditure portion, but they'll never voluntarily lower taxes.
And the taxes in the ACA aren't going to "fund" health care. They're going to fund an increasingly bankrupt state.
Catullus:
I agree with your definition of taxes not being tied to the health care benefits.
That is why the legislation passed, similar to that of Social Security. The FICA taxes could not be tied directly to the benefits.
In the case of Socal Security, I can see how the taxes were for the general welfare, for it was the American citizens who received benefits from the government. But in the case of the ACA, aren't most of the taxes for the private welfare of health insurers, which they receive in subsidies? In other words, they are receiving profits from high-priced coverage, which they normally would be ineligible for, due to its unaffordability.
Thus, we have general taxes for the private welfare of health insurers. Wouldn't that process then, not deem these payments as taxes?
In order to be taxes, via Social Security, the government would have to be the insurer.
What do you guys think?
Don Levit
Sorry for the Cynicism, but I think this was first and foremost a tax increase. It was justified by calling it health care (to which even that was a misnomer because it only affects health insurance). The other portion of the bill was subsidization of student loans by the federal government, a point long forgotten and the source of most of the original "savings" calculation from the CBO.
As for a parallel between this and social security: while the SSTF may be optically segregated, the "surplus" is all intragoverental IOUs. It is the left hand loaning the right hand money and spending the money. Even if the ACA had an allocated pool like the SSTF, the Feds would never just allow a giant wad of cash to sit on their books. They'd spend it and then say they need to either raise taxes (again) or take away benefits (social security).
Anyway one sliced it, this is most expensive way possible to account for future retirement and health care needs. You're better off doing what everyone under the age of 30 already knows about SS: save your own money as if none of it will be there. If there were any price transparency in health care, you'd see it's not really that expensive.
"An unlimited power to tax involves, necessarily, the power to destroy."
-- Daniel Webster
LONG Anti-Depressant Meds
Never before have so few paid for so many to live so poorly for so long.