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CBO - US Economy Set to Soar On Obamacare?
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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" 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 is PRICELESS. The law of unintended consequences.
What a load of bs.....in two (count them - that means '2' for the many illiterates among us) years there was no significant change between the two groups....wow, what a surprise. Of course there was no fucking change.....it takes at least that long to develop a cancer (or other major illness) and develop symptoms.....something wrong with you pricks who are against medical care for those who can't afford it....a missing gene or something.......
You "compassionate one" like to give stuff away but by reaching to someone elses pocket. Priceless!
It's actually called "risk compensation". Wikipedia link:
https://en.wikipedia.org/wiki/Risk_homeostasis
Interesting read!
Its defecits all the way down.
Move to the number one health care system in the world.
i've got healthcare guess i can light up? its hard to see how government subsidized healthcare is good for the economy, but then it is hard to see how war is good for the economy (check the DJIA from 2003 start of hostilities in Iraq) but then its not hard to imagine every woman at the supermarket shopping on her way home from work wearing scrubs. so which HCI stocks do we buy? I would guess the most profitable will those which are the least labor intensive, and we can outsource the jobs to Bangladesh..
Go long rubber gloves and plastic syringes. Made in Singapore, China, and/or Taiwan.
Since most Americans 0 to negative savings rates, won't it just be a transfer of consumption and not an actual increase in consumption? Also does the CBO estimate the cost of waste, fraud, and abuse of Obamacare that will no doubt be unprecedented?
"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. "
Not at all impossible. The democrats will be happy to get rid of Obamacare and replace it with a single payer government monopoly.
I guess you're okay with continuing to pay the corporate monopolists more instead.
"A recent analysis by the American Medical Association found that a single insurance company held 50 percent or more of the market in nearly 70 percent of local markets nationwide. And in 30 states, a single insurance company covers more than half the people who purchase insurance individually"
You mean like Medicare for all?
No like medicaid for all.
You mean like Medicare for all?
When people need medical treatment, they NEED medical treatment. Greed took notice of this long ago and spawned the totally corrupt Health Insurance Industry.
With the bankster antics of late, we've almost forgotten these vile humans.
Save some lamp posts for them.
So why to create government-bankster-insurance companies coalition? Pay directly to the doc.
With Chickens!
This comment should be so green that it makes Kermit look yellow.
All this contingent on medical costs (for insurers and medicare/medicaid) declining. We spend almost 20% of our GDP on medical care. Our neighbor to the north spends about 10%. The medical industry is just a full employment program sponsored by the government. If we want something other than the medical/insurance industry to thrive we have to reduce the cost of medical care by adopting something similar to Canada. We had the chance to do this in 2009 but blew it. Now, there is very little will (or willingness) to even engage in the debate. For those who don't know, medical care is still privately owned in Canada. (unlike the UK) Doctor's make a little less than the US, but their overhead has been significantly reduced by the single payor system. No more negotiating over treatments, claims, forms, and costs. It's all transparent and in black and white. We play a shell game in the US which keeps everyone in the dark about costs.
If we want a sustainable recovery, this is one area where we have the evidence showing it works. Of course, that ain't all there is to it, but it would be a start. Here are six steps we could take to improve our quality of life and future economic growth and stability as well as our liberty.
1. Single-payor health insurance for EVERYONE with total transparency and cost controls; (repeal medicare and medicaid) it would cover all major medical care, dental care and vision care.
2. Amend the constitution to reverse the "Citizens United" case to say that corporations are not natural persons and have no "rights."
3. Reinstate Glass-Steagall and force TBTF to divest all non-traditional banking functions and investment banking; return banks to their utilitarian function with leverrage not exceeding 10x.
4. Limit campaign contributions and impose term limits on all nationally elected offices; repeal the 17th Amendment so that US Senators represent the states; a corollary would be to prohibit former government officials from all lobbying activities for 5 years.
5. Amend the War Powers Act to require a majority vote of both Houses of Congress before the President can send the military to into a foreign conflict for more than 30 days. (would allow for short term humantiarian aid and evacuations) and reinstate Posse Comitatus IN FULL to prohibit the use of the military within the boundaries of the US unless invaded from abroad.
6. Pass a constitutional amendment to cap the total of all federal taxes at 20% and require a balanced federal budget except in time of a declared war.
Why "we have to do it like Canada" ? Why not going the complet opposite way and just make completly free market medical health care? You have to pay cash, you shop around, prices would go down immediately. You find the best doctor, clinic, hospital for the least amount of money. Free cometition always lowers costs. You don't need DMV cleark telling you to which doctor you need to go to. You need to save for a rainy days true, maybe government should encourage that by not taxing your medical savings accounts. Is this really difficult thought to grasp? No, but there are interests groups who don't like it and individuals - future patients-- who don't want to pay for their health care. They would prefer to have it 'for free'. That's the problem. Do you know what's Canadian's overall tax rates are? LOL
Hard to "shop around" when there's only one game in town.
"A recent analysis by the American Medical Association found that a single insurance company held 50 percent or more of the market in nearly 70 percent of local markets nationwide. And in 30 states, a single insurance company covers more than half the people who purchase insurance individually"
Get it through your thick ignorant skull: healthcare is not a product with the same flexibility of demand as a car or dishwasher.
Right on, LadyEconomist. Canada is the WRONG direction. If people had their own healthcare savings accounts that could be managed individually and could be rolled over each year, it would encourage people to shop around, create competition and drive prices down.
I would not hold Canada up as anything but an example of what not to do. Things I can think of off hand that happened in Canda. The governments pay universities to graduate fewer doctors to ensure there are shortages. You can read War and Peace while you are waiting to get in to see a doctor. Incompetent government functionaries will leave patients with disesases like SARS sitting on gurneys in hallways of busy hospitals for hours. Political connections will control if and when you get treatment. You will wait and wait for a test for a life threatening disease and when you finally do get tested, oh so sorry it is now terminal, oh well now the government doesn't have to fund that expensive treatment. The bureacrats who control the local hospitals budget will take the money that should be spent on patients and spend it on other things like luxury housing. Housing that they will rent to themselves at a fraction of the fair market rate, and the political connections that got them into those jobs mean they will never be charged for fraud. In Canada the wealthy jump on a plane for the US as soon as they think there is something wrong to get 1st rate care instead of 3rd rate care. That includes the politicians that claim medicare is the greatest thing since sliced bread. Want health care to be better, get government out of it.
Good thoughts. Suggestions on how to remedy rather than the usual bitching. The problem is that a blueprint of this nature has a -22% chance of being enacted. I bleive that your 6 goals need to be opaque. In other words need to be the ultimate goal but like a chess match, you start with small pieces of legistation (pawns) that pave the way for a more meaningful agenda.
Example: Offer banks the option of adhering to Glass Stegall. Those that opt out would reduce their capital requirements and FDIC premiums. TBTF on the other hand would require a higher capital level, higher FDIC premiums, and more restrictions and oversight. Orignally, I thought we should eliminate FDIC Banks....let the consumer/businesses decide the banks who are worthy. But the problem is that the US consumer is so stupid about their personal finances thye could never look at an inocme statement and figure good from bad. We require Algebra II as a high school graduation requirement but most Americans do not have the discipline to handle a checking account.
Points 3, 5, 6 are winners in my book. The 17th Amendment was the biggest blow to states' rights and federalism in general, and a major victory for the forces of progressivism.
Point 1, see my above response to moneybots. Single-payer fails, given my experience in Medicare. I may have to look a little deeper into the Canadian model, though. Who knows? It may amend my opinion.
Point 2, I have reservations about liniting the free speech of certain groups of people (corporated persons?).
Point 4, again, major reservations about limiting a person's political speech vis-a-vie campaign contributions. Mandated term limits are a cop-out, absolving a free citizenry of its obligation in a republic to apply its checks and balances on its government. If they can't be bothered to be sufficiently engaged in their civic responsibility to "clean house" when needed, then term limits are the least of a republic's problems.
I am going to package and sell Self Surgery Kit's, depending on ailment each one with different items. The problem is the anesthetic, perhaps a bottle of Knob Creek would be a nice touch, for the ladies, a quart of Slow Gin Fizz. I sewed myself up once, drunker than Cooter Brown, no worse than sitting in a ER for 12 hours with 56 illegals getting free shit for the fartlings sniffles. Oh, fuck the state and their monopoly on sick care.
Kudos. I've sewed myself up too, 8 stitches with fishing line. But I used Southern Comfort, you know, to comfort me. Once you get past the first stitch it's really not a big deal.
Now try giving yourself chemo!
Quotes from Democrat strategist, Doug Sosnik, in his May 9, 2013 report "America...Still Looking for Change That It Can Believe In";
"The unresolved federal budget crisis, the across the board sequester cuts, a fragile European recovery that many economists feel is at heightened risk and the implementation of Obamacare, which is likely to raise health care rates for many Americans, will continue to put downward pressures on the sluggish recovery".
"The betrayal of the public's trust has contaminated the country's mood and is the dominant influlence behind the current attitudes toward elected officials and institutions in our country."
"The one trend that transcends this partisan divide is the emerging populist movement in this country."
"These recently elected members from the left and right have several things in common: a strong bias against big institutions, opposition to nation-building efforts around the world, a resistance to maintaining high levels of defense spending, disapproval of corporate welfare for big business, and a strong interest in holding people responsible for the abuses that occured on Wall Street."
"Since Obama was elected President, the Democrats have lost nine governorships, 56 members of the House and two Senate seats. During his presidency, the party's favorability has declined 15 points."
http://images.politico.com/global/2013/05/09/sosnik_memo_59_final.htmlThat explain why Obomber continues like he is running for a 3rd term; they want the mid-term to do whatever they want. Last chance sucka.
Yes finally America is saved and summer recoveries are on the way. In D.C Maryland and Northern V.A Where I live the economy is booming, as we're all safely nestled in the cockles of federal government employment wrapped in an informational cocoon reinforced by corporate media propaganda and Ben Buzz Lightyear Bernanke. QE to Infinity and Beyond!!!
Of those families actually paying taxes, close to 50% are living paycheck to paycheck. Where is the average premium cost of $400 coming from?
You missed it by $1,000. Average family premium alrady costs $1,000 to $2,000. You will be only subsidised if you make up to $92,000. Average family of 4 making up to $92k in CA lives from pay-check to pay-check already.
When the skyrocketing premiums became evident, a sane government would have scrapped the entire thing. They don't give a crap about the people, it's all about power and control.
'Where is the average premium cost of $400 coming from?'
From the overflowing coffers of small business. Ask any Community Organizer. It's simpleton math.
Obamacare is going to be a disaster. Worse than windows 8.
If they can't reject your application for insurance and they can't charge different risk pools more money, only unhealthy people will get insurance. There will be no healthy people to spread the costs out. The price of insurance will skyrocket. The public insurances will bleed cash. Everyone will be pissed.
And while there is a "mandate", it's always going to be cheaper to pay the fine. And fine is not going up because to do so would be political suicide.
A parallel all-cash market in healthcare is coming. It'll be great until the Fabians realize it's bankrupting them and they call it a black market and try everything in their power to demonize it.
I've heard this argument on ZH . You will be able to buy insurance in the ambulance on the way to the hospital. True - it cannot be rejected for pre-existing conditions. But they can impose a 90 day WAITING PERIOD.
Everyone needs at least minimal high deductible insurance, if only so you get the reduced price list. If you pay the insanely inflated uninsured hospital rates, expect a bill for $100k and to be bankrupt.
Medical tourism works until there is an emergnecy. You need to think this thru. I know several people who lost a lifetime of savings by not considering this.
There's a difference further between ambulatory acute care and disease care. The ER is expensive. But the ER is expensive even for those with insurance. But if you find yourself in that situation where you need to be stabilized, the hospital is going to do it.
The waiting period for health insurance doesn't mean anything and everyone with a series 6 can tell you why. If you apply for insurance and the next day you file a claim, they have to process the claim and the application in a mutual exclusive way. If you put in the application for life insurance and you get hit by a bus walking away from the sales guy, you were covered so long as they wouldn't have otherwise rejected your original application. Same with health. They may delay 90days. So what? If the hospitals knows you above insurance, they going to keep going after the insurance company.
Don't believe me? Hospitals try to get people who they know that are poor waiting in the ER to actually apply for their medicaid on the spot. Been doing it for years.
No one needs a minimum amount of any insurance coverage. It was true before the law was passed. It's no longer true.
The only question you avoided here is: will there still be minimal high deductible insurance offered in a few years?
tearing down millions of foreclosed vacant homes should be quite an economic boost. didn't pelosi say unemployment is economic stimulus? Thats gotta be good for another 1%.
Meh. I'm Canadian and obamacare scares the crap out of m for you Americans. It exacerbates every wrong with US H/C. If it was a true single-payer system as the rest of the OECD has it would halve your costs. Instead estimates are 22% of GDP by 2015 not the 9% it should be. It's a massive money grab that could easily destroy the US economy. Probably will.
Single payer systems mean long waits and shitty care. A free market system would do the trick, and even though we have tens of millions who can't afford any kind of care, we can give them medical savings accounts, allowing them to keep a % of what they don't spend. The system needs incentives, not more bureaucratization.
My canadian friends all say that's not so. They find US doctors give worse care because they're rushed to make more bucks, instead of caring about patient outcome.
Medicare is single payer. Are retirees complaing about long wait times and bad service? No, they are not. Your argument is a fail.
Yeah, MKKBY, that is why so many Canadians drive to Vermont and NY and any other border state to pay out pocket to see our bad doctors. All my relatives in Canada are held hostage to doctor's appointments planned months in advance, meaning, an important event suddenly happen and they have to decide between, as an example, going to a funeral of a family member out of town and therefore having to resechedule an important doctor's appointment that will put them back in queue for another several months. It is a very rigid system.
Go talk to some docs in the US and find out what really goes on with Medicare and Medicaid patients. Hospitals and doctors often don't want to deal with them as they lose money with these patients as the reimbursements are so low. I know of a case where low reimbursement resulted in the death of a patient as no hospital wanted to take the patient that would cost thousands to treat and would only pay a fraction of the tab.
By extension, what do you think happens in Europe in many of these countries that are bankrupt and offer "free" health care? Just because you don't read about it, doesn't mean there aren't some very frightening things going on.
You seem to think that the US is not also bankrupt, despite having "free market" healthcare for decades.
You repeat a myth that is not matched by reality. Although "all your relatives" may be flooding into the US for health care, according to a study in peer reviewed journal Health Affairs, they represent a small group of Canadians. So I don't know whether you are making this up or you just have a weird group of Canadian relatives:
http://theincidentaleconomist.com/wordpress/phantoms-in-the-snow/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+TheIncidentalEconomist+(The+Incidental+Economist+(Posts))
I'm in Medicare because I'm paraplegic (car accident in 1994, resulting in spinal cord injury) and I have end-stage renal disease (in need of a kidney transplant). I can tell you right now that I notice a significant difference in the quality of care I receive, and my ability to get timely treatments for the myriad health problems my two primary health concerns have spawned over the years. (Pressure sores and peripheral neuropathy being the most prominent of the list)
I have no doubt that you are not hearing a lot of noise being generated by the geriatric community about the numerous problems associated with being on Medicare. I am sure that has nothing to do with a lapdog media in the Western world that carries water for the forces of progressivism by the boatload.
Keep your statist hands off my Medicare!
What a giant fucking hypocrite: "We need a free market for everyone except ME ME ME!!!!"
you could have started and stopped with "it's a massive money grab"
US Economy Set to Soar On Obamacare: BULLSHIT