CBO - US Economy Set to Soar On Obamacare?

Bruce Krasting's picture


The Congressional Budget Office put conservative economic thinkers on their ass this week. In this Report (pdf), the CBO concluded that the US budget deficit is about to collapse to insignificance. The improvement in the deficit outlook is so large that it has lead liberal thinkers to start calling for more stimulus spending. If it were not for the three scandals brewing for Obama (Benghazigate, IRSgate and APgate) I think there would be calls to spend some more government money.

The CBO assessment of the deficit profile relies on every trick in the book. The assumption is that all of the variables that weigh on the deficit will be improving over the next few years. Tax collections will remain at historically high levels. Government spending will decline as the economy improves. Fannie Mae and Freddie Mac will be kicking $95Bn into the coffers. Social Security will cost less than previously thought, the same favorable result is assumed for both Medicare and Medicaid. And of course, there will be no wars or military incursions that have to be paid for. But, by far, the biggest driver of the reduced deficits will come from a robust economic recovery that is set to occur. This is the CBO forecast for top line GDP growth:




Wow! 6.5% growth is coming our way! Don't worry at all about the endless recession in Europe. Don't consider the rapid slowdown in China either. And please don't worry about the fact that the Fed is going to be taking its foot off the gas over the next 24 months - all that won't make any difference. The USA is set for a spurt of growth not seen for years.

What could the CBO be hanging its hat on when making this bold predictions of rapid economic expansion? I wonder if the CBO is relying on Obamacare to provide the big boost. This is the only significant economic development on the horizon. It will change everything when it's finally implemented. It will result in 32 odd million more people having access to healthcare. And when those people do have health insurance, they will be going to Doctors, getting treatments and medicines. And with those visits and related spending, the economy will get a lift - at least that is the thinking.


There is some evidence that Obamacare is going to ratchet up health spending. The New England Journal of Medicine has done a study on the results of an experiment in Oregon. Some 6,000 people were given access to Medicaid for two years. There was a control group of another 5,000 people who did not get access to health insurance. What did those who won the lottery for the free health benefits do? They went to Doctors of course. The study showed that those with insurance were 2Xs more likely to visit a doctor, and would take twice as many prescription drugs. Obamacare will result in an increase in medical diagnostics; the number of MRI's, X-rays, blood test etc. will increase markedly when free health insurance is available. The cost of all these new medical services will add to GDP, and increase employment in healthcare.

The Oregon study showed that healthcare spending rose by $2,750 for those who had access to Medicaid versus the control group. If these results are applied to all of the 32m people who have no insurance today, it would result in an increase in spending of $90Bn - that comes to 5.5% of GDP. While not all of that spending is going to happen, its pretty clear that Obamacare is going to ramp up the economy by a meaningful amount - a 2% net increase in economic activity is possible.


To the extent that Obamacare is measured as a jobs program it may be considered a "success". More medical spending will be the result. The larger question of what it will do for the health profile of Americans is not at all a sure thing. I was surprised by the conclusions drawn by the Oregon study:


This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured physical health outcomes in the first two years


The reason why overall health results were not improved for those with insurance was interesting. People who have healthcare available to them often adopt risky behavior. For example, those who had health insurance in the Oregon study were much much more likely to smoke. (10% increase over those that did not have health insurance) This conclusion confirms what has been observed in other situations. When people have seat belts, they think they are safe, so they drive faster. It appears that the same holds true on health related matters.

The pessimist in me says that the roll-out of Obamacare is going to be anything but a success. The state insurance exchanges will not be up and running on time. Getting those 32m people to sign up for Medicaid will not happen at the pace that is currently anticipated. Obamacare will not be the economic stimulus that is hoped for, it won't improve the nations health levels by much, and it's going to cost an absolute bundle in the form of increased taxes. My guess is that in 2-3 years most folks in the country are going to hate Obamacare, but it it will be impossible to get rid of by then.



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pfairley's picture

Healthcare is one of the main factions strangling the US worker and the economy. Other obvious ones are transportation, college and housing costs ( lately High RENTS)...cable TV/internet/phone costs don't help. Most of these are the last bastions of unions or quasi unions...pretending to be on the side of 'the US worker'...when actually they oppress the average worker....as a mid tier elite class.

 US productivity would be improved if doctors had appointments evenings and Saturdays. But like car repair in most places..they are too rich and arrogant to be bothered.

 Bring on the competition please. Most college grads and others could buy medicine directly from the pharmacist and do as well or better as seeing a doctor for most of their life. Many, many other countries allow this.

Propaganda about misuse of antibiotics creating resistant superbugs should  be directed at the billions of people outside the USA who buy direct from the pharmacy without a doctor....or with such poor education, they don't understand their doctor's prescription

steveo77's picture

 1966 Mustang Exhaust Note
This beast sat in the garage for 9 years, a fine aging process.  

I needed to make it run to ship it, and instead of just making it run, did a restoration on it.    It really don't get any better than this.

With separate dual exhausts, header, and Super Turbo mufflers, she really sounds good.   This little video from a small camera does not do any justice to the exhaust note, but you get the idea.    At two points you can just quickly hear the secondaries kicking in.  

I used to drag race this car late in the last millennium.


Also got a new post on Gold, ES, Corn


Yen Cross's picture

 'Obunga Care' will never be enforced Bruce. It's stillborn,and you're foolish to even suggest it will get to some enforceable point.

Nehweh Gahnin's picture

Free "health" care did not result in an increase in health because of risky behavior.  It resulted in no health benefit (and likely a decline over the long term) because this fucked-up sick-care system destroys people's health, it does not improve it.  The results are decreased exercise, increased toxicity (thimerasol and its mercury component, aluminum), and the treatment of symptoms, as opposed to the causes of medical "conditions."

And let me get this straight.  The government extorts more fiat at the point of a gun, transfers that money to the docs, bureaucrats, hospitals, Big Pharma and the insurance industry, makes their citizens sicker, and this transfer of wealth and socialization of costs is going to make the economy grow?  Seriously???

Obamacare wil have one knock-on effect as far as I'm concerned:  I will become a criminal, because the thugs are NOT extorting one thin dime (post-64 or otherwise) from me.

MFLTucson's picture


This is the brain trust that said that Obama care would cost 900 Billion in ten years, now the estimate is 3 Trillion.  Now they are suggesting that a front loaded premiums amount paid in advance of payouts which are all back loaded with expenses is progress.  Where does this lie end?  What the hell kind of a country has government offices lying to the people about everything?  Furthermore, this group has zero credibility on everything they have scored from Medicare to Medicade to every item they have touched, they have never been right.




Widowmaker's picture

"Health care" = bullshit bullshit bullshit.

...annnnd bullshit bullshit bullshit.

GMadScientist's picture

He said, lighting one Pall Mall with another.


disabledvet's picture

Outside of morbid obesity the USA types are probably the healthiest people on the planet. Amazingly our living standards are declining. Hey I'm the biggest fan of Wendy's cheeseburgers and Wild Turkey there is out there but "healthcare that isn't being paid for"??????? Go Phuck yourself Bruce the Bitch Whore Phuck Slut. We're spending a trillion a year on all your retarded bullshit "they call it healthcare" right now. An INSURANCE option is the only viable solution...I pray every night it can be effected from BOTH Democrats and Republicans having been afforded this health care option for many, many, many years. "there is no better insurance than Government insurance"...obviously I think the IRS has disgraced itself from managing this program...don't see why the GAO itself couldn't run the thing actually. Mine was expertly run by a Federal Agency that managed the totality of Federal Benefits...but just for Federal employees. Obviously I see no reason why they couldn't run this INSURANCE program "for the folks" as well. Germany has had one since 1870. Granted they won their war to get it of course. Interesting way of expressing victory still. "actually helping people."

kaiserhoff's picture

CBO = Mush for brains.

Lying with large numbers.  Fortune Telling for Accountants.  There must be a special level of hell for that.

CheapBastard's picture

"Pope Francis lamented that investment losses by banks trigger more alarm in the economic crisis than the struggle of people to feed their families...."




Hey, the Pope may be onto something here. he seems on the ball. I wonder if he reads ZH?

Non Passaran's picture

He's a socialist, a redistributionist Catholic.
What is good about that?

otto skorzeny's picture

Yeah - because those Tribesmen up on Wall St are doing such a great job of spreading the wealth by "Doing God's Work"

drdolittle's picture

The Francis abbey had a policy of selling their possessions and giving th money to the poor.

I have hope for this guy. Course, could be a smoke screen for all the money the church is going to have to pay for the molesters.

pashley1411's picture

Its not like the IRS and Justice are the only Fed bureaucracies that have gone over to the Dark Side.

All Risk No Reward's picture

The CBO's 2000 $0 prediction for the 2010 debt only missed by about $10,000 billion.

What's not to like about their new prediction with such a stellar track record?

Or did everyone forget already?

Debt Money Tyranny - You've Been Punked


SKY85hawk's picture


If Clinton's CBO can do it, why not this one?


All Risk No Reward's picture

"Deficits don't matter." - Cheney

All these bastards are on the international banker payroll...

How to be a Crook


Renaissance 2.0 - Financial Empire - Full Length - Damon Vrabel


Debt Money Tyranny


QQQBall's picture

Anyone Look at WLP chart lately? Just sayin'

QQQBall's picture

The US Medical System is broken. ObomberCare codified the failure

Bear's picture

Reading this has given me a headache ... do I have to wait until 2014 to have my free doc visit. 

the grateful unemployed's picture

wait a second, we have more people than we have jobs, and they all need healthcare? the logical thing would be to terminate them, so why are we building a system to sustain life at any [all] costs? already most of the elderly are on NOCPR. they talk you into this very early in the game. [i have seen how these forms are promoted] the next step is no heroic treatment at all, which includes heart bypasses and cancer surgeries. so how exactly is more healthcare supposed to be a cash cow that will create jobs. oh i get it, doctors charge more, do less. bruce didn't explain that.

drdolittle's picture

No CPR is the right choice for anyone over sixty. Unlike TV it doesn't work. A great study out of Vegas ( times known exactly cause of all the surveillance cameras, security guards trained to use aeds) average collapse to shock time 3 minutes (try getting an ambulance to your house in 3 minutes) and not one person over sixty survived. Only those with fibrillation or v tach survived. Any other rhythm failed.

80yos getting CPR is bullshit. I'm an ER doctor and, because many people don't have DNR status I'm forced to go through the motions, well aware of the outcome but, if you don't, some pos lawyer will have your ass.

the grateful unemployed's picture

we had an inhome nurse through medicare, and she explained the situation just as you have done. she also had the forms which opt you out of CPR regardless of the situation or location [i believe], so if you have a heart attack on the freeway, the parameds have access to that info. this goes much farther than just the standard nursing care forms which only apply to that facility. i know the term death panel is a hyperbole, i like to call them life panels. the life panel said i can have a new heart.  

geekgrrl's picture

This is the problem with using aggregate statistics (GDP) to measure the "health" of the economy. When you average everyone together, even the dead people are doing quite well.

Bear's picture

More lawyers. The US already has the highest ratio of lawyers in the world ... Obamacare is a Golden Opportunity for our friends at the Bar

geekgrrl's picture

The CBO has gone bonkers. 6.5% GDP growth? Right.

As soon as the vast number of people barely getting-by have to shell out a single penny more, that will be the straw that breaks the camel's back. How many people literally live paycheck to paycheck with nothing left over, no savings, and how many more are only existing because of payday loans and/or credit cards? If they don't get a policy, then their wages get garnished by the IRS for the penalty, and that will probably - by itself - go a long ways towards destroying the lives of millions of people and reduce them to living in a van down by the river. But hey, there's still a few dollars out there still left to extract from the common folk. This is going to be a case study in whether blood can be gotten from a stone, or to use a different metaphor, pushing a segment of the population off the cliff.

IMO, Obamacare is an extortion racket created by corrupt government officials and bankers, with the true goal of enriching themselves and their corporate buddies in healthcare, pharma, and finance. The only good thing I can say about it is that it could spark a completely unorganized tax revolt, simply because so many individual actors decide on their own that now is the time to resist feeding the system.

ebworthen's picture

All the 20 something's I know are getting 29.5 hours at work.

Gee, wonder why?  Obamacare will go forward because it enriches the insurance industry, big pharma, and corporate hospitals.

Regular main street Americans will be BLED DRY just to stay alive, and the kleptoligarchy enriched.  Lather, rinse, repeat.  And the I.R.S. will make sure YOU PAY.

Herdee's picture

At last,nobody will have to mortgage their home in order to save their life.The last major industrial country in the world to have a national health care plan for their people.Maybe that's the road to peace, finally?Start looking after your own instead of giving to people that hate you and spending trillions in order to be the worlds' policeman.Iraq broke the defence budget and the money was redirected after ending that conflict into Obama's legacy idea.

The Wedge's picture

"At last,nobody will have to mortgage their home in order to save their life".

That's funny. Wait, no it's not. Are you being sarcastic, because it's not coming through.

"Maybe that's the road to peace, finally"?

Uh, what. Again, are you making a joke? 

"Iraq broke the defence budget and the money was redirected after ending that conflict into Obama's legacy idea".

Seriously? Where did you get that idea?

Gotta be a joke, right? I suffer from wishful thinking.

Non Passaran's picture

To start looking after your own is to pay for yourself and your immediate family, not to build a fascist utopia.

adr's picture

Quality Farm and Fleet will become the new doctor's office, as long as they continue to sell livestock antibiotics.

Cut the pills into 100mg pieces and take two a day for 12 days. Save the $150 it costs to see a doctor for 5 minutes to write a simple prescription for a sinus infection.

ezkappdo's picture

like in every country that went to a universal health care system, it takes twenty years of changes and adjustments to make it acceptable to the society it serves...this is only the beginning for the USA, so buckle up.

Costs will rise and health care salaries and medication and device prices will be reduced (like in the rest of the world) to make it function. the insurance companies are squeezing the last big profits before we see that they cannot hold down costs will lead to a public option that will hold their feet to the fire and reduce their profits to minimal like in the rest of the world...but they will be in a sustainable business that provides a vital service and employment to those in it. yes it is socialized (like all our social democracy allies), that is what the rest of the world has because the health of the current & next genereation of workers and the cost to provide that is in the national interest...and they give a crap about their fellow humans rather than making a big profit from their illness.

A global currency/economic crisis will make this harder but because of that looming crisis it is ever more important...I hope we can see that or we will pay a bigger price if we do not.

just my view/opinion.

drdolittle's picture

This and the idea of accountable care organizations will increase costs. When the hospital group owns all the doctors and the test facilities they will push the doctors to do more needless testing than is already done. Upsell!!

And, it can be done for less. See Cubas spending per person. Their life expectancy misses ours by about one month. It can't be done for less through the insurance companies but only through a national health service. Or, heavan forbid, each person pays their own.

BigDuke6's picture

Not true on the national health service being cheaper, the uk nhs relies on imported doctors stolen from the third world that needs them. Cheap but a false economy

Australia has the best system, a 2 tier set up where the insurance companies are tightly regulated and the doctor is the boss
Nothing else is sustainable

LadyEconomist's picture

Why to take CBO's report at the face value? If DOJ, HHS, EDU, IRS, EPA, NSA, etc. are corrupted why to assume that CBO is clean? This is a systematic failure and it should be taken as if China's government is talking about it's booming economy.

Professorlocknload's picture

Government Medicine will be great for the massive Union bureaucracy it creates, just bad for the patients. But, I guess it's the only way to ration medicine in a collapsing economy with an aging demographic.

Next will be legislation against all competition. Then the Health Care Kingdom will be on it's way establishing the IRS as the most powerful agency on earth.

Time to start considering Medical Tourism as the next new growth industry, maybe?


NoTTD's picture

And by the way, 100% of this country's residence already had access to healthcare.  Federal law, in place for decades, requires all hospitals, public and private, to administer care regradless of the patient's ability to pay.  Refusal to do so can  be criminally prosecuted.


One thing the left does constantly is interchange reference to access to  "healthcare" with access to health insurance, the same error made throughout this article.  In fact, Nancy announced when this monstrosity passed, "At last, Americans have healthcare." Moron.     

drdolittle's picture

They are entitled to a medical screenig exam and any emergent treatment that may be uncovered at that time.

Say you got a bad gallbladder or cancer. Ain't no emergency, hit the door. Awesome huh?

MeBizarro's picture

Your referring to EMTALA and all it requires is that the hospital follow 'usual and customary' standard medical practices when evaluating a patient who comes in through the ER.  There have been several Supreme Court rulings on this and it doesn't automatically require a hospital to admit a patient and give them comprehensive care.

bunnyswanson's picture

They show up in the ER.  They have no ins and no money.  But they need care.  ER charges are one thing.  Lab tests cost $.  Diagnostic studies (radiology) do as well.  Medicare is no longer covering diagnostic studies done by radiology.  Lab work will have to discover the source of the patient's complaints. 

Medicare also will refuse to cover charges if patient was released and within 30 days returns to ER for other than MVA or trauma due to accident (the prior visit should have discovered the medical condition prior to discharge, allowing treatment - punishing medical facility for oversight).

And then there are the doctors.  Know many medical care providers who will work for peanuts in the medical field?  They will refuse to see the patient if they think they are not going to be reimbursed fairly.  Reasons stated:  "No longer taking new patients."


--- Pre-existing condition fund depleted.

21 page application:


It requires working in the hospital to realize how sick the US public is.  An ER arrival after an MVA is found to be diagnosed with metastatic cancer throughout on a nearly daily basis in one moderate-size hospital. 


drdolittle's picture

Correct. And, some people toward the end of life are sick enough that they need to be in the hospital more than onve per month. Sometimes patients don't finish the course of antibiotics and the pneumonia returns. Also, as I understand it, medicare will claw back payment for the first hospitalization. This will bankrupt the nations most vulnerable hospitals, the ones that take care of the porr and poorly insured.

It's part of the plan. Decrease access while making it look like doctors and hospitals just don't want to take care of people. Most people will fall for it and blame providers.

And, please, none of this crap about doing it for free.  I assume only a small percentage of you all are financially independent and donate all your working hours to charity.

The Wedge's picture

It's part of the plan. Decrease access while making it look like doctors and hospitals just don't want to take care of people.

Some said this would overwhelm the healthcare system with patients. It may be underwhelming. With the rising cost of health insurance some may be priced out and pay the fine/tax/mugging

And, please, none of this crap about doing it for free.

Do you really want a doctor, over worked and awake for 28 hours straight to be paid nothing or peanuts holding you or your family's life in their hands? Not me.


NoTTD's picture


Very insightful.  


Can I get paid to think out loud and state the obvious?


TheMerryPrankster's picture

sorry all positions for NPR on air correspondents are currently filled. We do need someone to get coffee for kai Ryssdal  while he does "the days numbers" on the marketplace report.

Fix-ItSilly's picture

Forecasting GDP is not brain surgery.  Unless there are extraorinary circumstances, just look at demographics like population growth and age segments.

For the US, age demographics signal slowing GDP.  To leap to the forecasted 6.5%, just forget the downside and incorporate the growth from healthcare!

Figures don't lie, but liars do figure.

Longing for the old America's picture


Since Obamacare must be paid for... all the increased GDP you say would result would be more than offset by sapping whatever those same dollars (plus government waste and frictional costs of providing) from more productive uses.  The dollars don't come out of thin air they are diverted from better uses.