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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:

 

cbogdp

 

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.

 

BO

 

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Sat, 05/18/2013 - 09:38 | 3575591 Doctor of Reality
Doctor of Reality's picture

I'm a doctor and YES, I can make a lot of money if I "work the system". Of course I'll need to hire more help, and thus my net income as a % of gross will decline... so I'll be working harder for less take home. Would you work harder for less if you didn't have to? Many of us are looking for a way out, and FAST! Those of us who aren't too heavily indebted will decrease working hours and not increase. Those who are 55+ are leaving in droves, or planning to in the next few years. Good luck finding a good or excellent doctor; as the best were usually more successful financially, and thus have the ability to work less or retire... leaving the bottom of the barrel, money 1st, outcome last doctors.

Not all who stay will be about the quan, but more than you think will care less about the patient and more about their material well being.

Sat, 05/18/2013 - 16:13 | 3576303 mkkby
mkkby's picture

@dr of reality -- You'd be under less stress and maybe even enjoy working if you spent more than 30 seconds per patient.  Don't go into debt to buy the latest equipment.  Locate where office space is inexpensive.  Keep down the expenses.

It's not a choice between "working the system" and patient outcomes.  A little business sense goes a long way.  You could also move to a small town and work/live at a slower pace.  It's also not a choice between quitting and failing.

Sat, 05/18/2013 - 15:25 | 3576240 buyingsterling
buyingsterling's picture

Tell your doctor friends to wake up: they will not be allowed to retire, or at least not for long. Eventually they will work at gunpoint.

Sat, 05/18/2013 - 11:30 | 3575771 mess nonster
mess nonster's picture

I see a huge increase in alternative medicine- not because it's more effective, but because it's cheaper. I can go to an acupuncturist/chinese herbalist to work on my cancer or bursitis for a fraction of the cost of a conventional doctor. If the witch doctor is competent at what he/she does, I feel cared-for and confident the treatment will work, which is 90% of the cure. It doesn't matter whether or not the treatment is effective- (how many people die of cancer under conventional care?) all that matter is that I believe in its  effectiveness- all the way to the grave.

If I don't have insurance; if I don't want to get a medical ID card: if I don't want to pay taxes: if I want to stay under the radar, I'm going to be blocked out of the health care system. That means I'll need underground medical care. That means self-treatment (super glue and duct tape), alternative treatment, medical tourism, or black-market doctors. I see a HUGE growth in all these medical avenues.

 

Sat, 05/18/2013 - 19:25 | 3576642 geekgrrl
geekgrrl's picture

I was surprised to see a local billboard recently, advertising low-cost cash payment medical services, so I think you're right these markets will grow.

Sat, 05/18/2013 - 14:30 | 3576140 James
James's picture

mess nonster- Super Glue was originaly made for the defense dept. to seal flesh wounds in the field. While I'm on this topic WD40 was originally made to spray on missles in storage to keep from rusting,

Sat, 05/18/2013 - 12:48 | 3575901 new game
new game's picture

right on man - the free market will rise to the occasion; as i see a whole-lot-a NON-COMPLIANCE...

Sat, 05/18/2013 - 10:45 | 3575687 orez65
orez65's picture

You obviously do not understand Keynesian theory!!

The Fed will simply print new fiat doctors, nurses, radiologists ...!

Sat, 05/18/2013 - 11:45 | 3575791 new game
new game's picture

WHAT PART OF FASCISM DON'T YOU UNDERSTAND?

the corporations of big pharma, 3rd party health providers, hospitals carefully crafted a 3800 page document to add 30 million + by law customers.  with the supreme court backing you are now enslaved to a system that prescribes health as the cabel has now got you by the short hairs or you must pay a penalty for non compliance. and this will be backed by the force of law.

sounds like freedom to me /sarc - if there ever was a time to protest a lose of freedom it is now!

by my calculations(i am, by choice, uninsured) i would have to pay 300/month (for the silver plan 70/30) or pay $600 penalty. otherwise i could get on my wifes plan for $500/month, which i will not do.  i escrow $6000 per year as saving toward medical care as needed.  i am money ahead and am free to put that toward gold or free range meat, organic food, essential oils, health club memberships, bikes, and farm equipment to stay outhside the monsanto food system. this is a lot of money not wasted for subsidizing a system with no incentive for people being healthy. i opt out as i look around and see a bunch of fat fucks that don't take care of them selves and ask why the fuck would i pay for their healthcare? and that is the long and short of the current system...

Sun, 05/19/2013 - 00:49 | 3577284 kareninca
kareninca's picture

But new game, what do you plan to do if you are in a car accident and end up with 250k in bills?  If your family has no savings or assets or income, I guess it doesn't matter; you can't get blood out of a stone.  But if you have any income or assets, won't you be hounded by creditors?  Your assets attached?  Your salary garnished?  I know people who have gone from having modest assets, to becoming destitute, in this way.

I don't dispute your right to make this choice.  But what is your plan, if you have huge health expenses?  This is not an idle question; I know people who are trying to figure out options.

Sat, 05/18/2013 - 21:31 | 3576867 newworldorder
newworldorder's picture

RE: new game

Obama care was not legislated for someone like you - who has various options. It was legislated to cover the non working poor with no insurance as well as those with pre existing conditions, who could not afford insurance and high prices.

Those who have current insurance, will to an extent, subsedise a portion of the cost for the those that do not have it aT present. Another way for the Democrats to spread the wealth to both the non working population AND their favorites in the medical industry/big pharma.

Sat, 05/18/2013 - 16:11 | 3576316 mkkby
mkkby's picture

@new game -- Not that I support Obama, but you are an idiot not to have insurance.  You obviouly don't understand that hospicals charge insanely inflated prices for the uninsured.  If you get hurt/sick and end up in a hospital, you'll leave with a $100k bill.  Your family won't thank you for bankrupting them.

Get the highest deductible plan you can find that has full coverage, if only so you get the insurance company discounted prices.  It sucks, but it's the only way to play this game and keep any of your earnings.

Sat, 05/18/2013 - 19:09 | 3576616 adr
adr's picture

You haven't heard of the Fuck You Overpriced Assholes Medical Plan?

When the hospital bills you $2700 for sitting in the waiting room for two hours and give you a band aid. You send them a check for $150 with a note, "Be happy I sent you this you fucking crooks."

When the collections department calls say, "I paid what was fair and reasponable. If you want the rest, take it out of the $8 billion fund for the new cancer wing. They can probably make do with a few less 70" plasma TVs in the lobby."

Sat, 05/18/2013 - 12:47 | 3575898 kchrisc
kchrisc's picture

Someone that gets it.

Obamacare is fascist NOT socialist.

If it had been socialist it would have expanded Medicare/aid instead of shrinking it.

It's a fascist country ant Obama is the fascist head of it. hujel

Sat, 05/18/2013 - 12:58 | 3575927 Everybodys All ...
Everybodys All American's picture

Whether Obama is a fascist with socialist leanings or a socialist with fascist leanings makes no damn difference. Either way he needs to be made at worst a lame duck in the next four years so this country can remain free.

The dreams of his father a socialist were of socialist outcomes.

Sat, 05/18/2013 - 20:29 | 3576738 BeetleBailey
BeetleBailey's picture

Barack Obama is a cunt. His programs blow. His ObamaNOCare is a sham.

FUCK John Roberts.

Sat, 05/18/2013 - 11:18 | 3575749 Kayman
Kayman's picture

Ask Bernanke. As the stock market rises, you will begin to feel wealthier and will demand a kidney transplant. GDP fixed !

Sat, 05/18/2013 - 09:37 | 3575585 shovelhead
shovelhead's picture

Will my teen-age enema nurse be covered under Obamascare?

Sat, 05/18/2013 - 14:51 | 3576181 sun tzu
sun tzu's picture

Yes, he will be covered

Sat, 05/18/2013 - 15:09 | 3576219 DeadFred
DeadFred's picture

A new meaning for 'Obama Care'.

Sat, 05/18/2013 - 09:34 | 3575580 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

35 million new participants for prozac, zoloft, paxil ...

There's also going to be a lot of bed pans to change, so that our chronically underemployed populace can now find meaningful and low paying jobs ...

This the land of the SERVICE economy. Obamacare is just following that logic. The internal contradiction is that individual consumers can only be serviced properly by the government, who is THE SERVICE PROVIDER of first and last resort.

Sun, 05/19/2013 - 11:10 | 3577755 Non Passaran
Non Passaran's picture

Diaper flippers!

Sat, 05/18/2013 - 09:29 | 3575573 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

S&P 3500 ... thanks CBO!

Pass the crack pipe please.

Sat, 05/18/2013 - 09:26 | 3575570 Everybodys All ...
Everybodys All American's picture

There is no bias at the CBO. No more than at the IRS. /sarc

These numbers are meant like all the others the CBO conjurs up to make Obama and his transformation look good. Period. How can GDP mean anything when the government is now believe it or not going to count intangibles into the number? This is all just more socialism is great nonsense coming from the democratic left in this country. It works for a while in the beginning because they are essentially hollowing out of everyones accumulated wealth. When the money is gone well thats when all the shooting starts.History tells us how this ends.

Centrally planned government will not create a sustainable economy. It never has historically. Just ask the Soviets, the Cubans, the Venzualans, the East Germans, etc.

Sat, 05/18/2013 - 11:08 | 3575738 Kayman
Kayman's picture

'GDP mean anything when the government is now believe it or not going to count intangibles into the number"

Wow. Production is not Guns or Butter; it is Feelings and Concepts. 

Once you start including "Government" as part of GDP, the numbers become fake. Every $1 the Government "produces"  is a $1 taken from someone else's private production in GDP.  And for every $1 taken from the private sector, Government never returns $1 in value.

Sun, 05/19/2013 - 04:10 | 3577418 Troll Magnet
Troll Magnet's picture

Yeah but what about our freedom? Isn't that like worth all of our tax dollars or something?

Sat, 05/18/2013 - 23:47 | 3577208 Tapeworm
Tapeworm's picture

What about the "Tang" that came out of the Moon Programme? You halfwits are alwys so negative on the goomint.

Mon, 05/20/2013 - 06:33 | 3579614 Poor Grogman
Poor Grogman's picture

Taxpayers had to either work harder or invest less money in other ventures to pay for the "moon program" So what is your point?

It's a bit sad that the beloved "moon program" from all those years ago is the about the only thing worthwhile that .gov claims credit for. Still I suppose all those weapons of war have generated numerous technological developments that help build even better machines of mass murder.

.gov. Killing people with pretend money since 1913

Sat, 05/18/2013 - 09:42 | 3575595 WestVillageIdiot
WestVillageIdiot's picture

The Coca Cola trademark must be worth at least $100 billion.  That should go into GDP.  Ronald McDonald must be worth another $50 billion.  That should go into GDP.  Pamela Anderson's night deposit box must be worth at least another $34.  Don't leave that out of GDP. 

The Soviet experiment would have worked if they had just tried harder.  Just ask any totalitarian (we call them "leftist") nutjob out there.  What is Krugman doing right now?  Somebody tell him to wipe the cream off his chin and weigh in on this subject.  He'll settle it, once and for all.

Sat, 05/18/2013 - 09:08 | 3575559 Solarman
Solarman's picture

The only way yyo get that GDP growth is if the banks increase credit byat amount.  Otherwise we have substitution spendin and no growth.

 

At the same time, now that everybody has refi'd into lower rates, the amount of debt in America is going to plummet.

 

 

Sat, 05/18/2013 - 09:05 | 3575554 CheapBastard
CheapBastard's picture
New Jersey Hospital Has Highest Billing Rates in the Nation

 

Based on the bills it submits to Medicare, the Bayonne Medical Center charged the highest amounts in the country for nearly one-quarter of the most common hospital treatments,  according to a New York Times analysis of 2011 data, the most recent available. No other hospital was at the top of the price list more often.

 

The increasingly contentious issue of hospital charges drew renewed attention last week when the federal government released Medicare data showing that facilities nationwide submitted widely divergent bills for the same treatments.

 

http://www.nytimes.com/2013/05/17/business/bayonne-medical-center-has-hi...

 

It's only going to get worse. I'm so cheap I work hard to stay healthy and avoid the hospital....b/c .....

 

I'm a Cheap Bastard.

Sat, 05/18/2013 - 09:53 | 3575607 Yancey Ward
Yancey Ward's picture

Then you are one of the ones who will have to be coerced into purchasing more health insurance.

Sat, 05/18/2013 - 09:38 | 3575589 WestVillageIdiot
WestVillageIdiot's picture

This is shocking.  I figured Jersey City would have won this title. 

Sat, 05/18/2013 - 09:13 | 3575551 andrewp111
andrewp111's picture

CBO forecasts with positive 3-6.5% growth every year out to 2023?  No negative years? They are smoking something at the CBO.

I just looked at the document. They aren't projecting Medicaid outlays to grow by enough to account for the GDP projections.  They must be assuming that the Fed's QE stimulus finally results in a surge in economic activity or some other rosy scenario.

Sat, 05/18/2013 - 16:31 | 3576349 _It Is Balloon_
_It Is Balloon_'s picture

It's the Mexigration Dividend.  

Sat, 05/18/2013 - 15:22 | 3576236 buyingsterling
buyingsterling's picture

The fact that obamacare spending will be considered part of GDP just shows how incredibly corrupt this country has become. No govenment spending should be included in GDP, it's all printed or recycled money.

Sat, 05/18/2013 - 09:37 | 3575587 WestVillageIdiot
WestVillageIdiot's picture

"They are smoking something at the CBO."

 

It's purely medicinal (cough, cough). 

Sat, 05/18/2013 - 08:57 | 3575549 t0mmyBerg
t0mmyBerg's picture

Just the sight of that face makes me want to vomit up my wheaties.

Sat, 05/18/2013 - 09:36 | 3575584 WestVillageIdiot
WestVillageIdiot's picture

Then quit eating Wheaties.

 

There was a picture of the Phony in Chief and his little bride that I saw earlier today.  The wig she had on was just awful.  It was frightening to think of just how rotten that couple is.  And I thought Bill and Hillary were repulsive. 

Sat, 05/18/2013 - 12:43 | 3575890 PubliusTacitus
PubliusTacitus's picture

The truly shocking and depressing thing is that Sotero and his wifecow are socially rewarded for their ignorance and repulsiveness.

 

We are now this

 

http://www.imdb.com/title/tt0088846/

Sat, 05/18/2013 - 17:50 | 3576476 t0mmyBerg
t0mmyBerg's picture

I loved that movie.  Still do really.  Tuttle not Buttle.

Sat, 05/18/2013 - 08:56 | 3575547 new game
new game's picture

take your medicine, go home, eat the cake...

Sat, 05/18/2013 - 09:35 | 3575583 WestVillageIdiot
WestVillageIdiot's picture

Urinal cake

Sat, 05/18/2013 - 10:15 | 3575641 Common_Cents22
Common_Cents22's picture

yellowcake

Sat, 05/18/2013 - 08:54 | 3575546 StarTedStackin'
StarTedStackin''s picture

What HASN'T the Obowel Movement lied about?

Sat, 05/18/2013 - 12:46 | 3575895 Chuck Walla
Chuck Walla's picture

I can guarantee something will be sore. Your asshole for one. And you right wingers can forget a lot of life saving things like surgery or stents or pacemakers. All must submit their lives to the state.  Barry You will decide, king like, thumbs up or thumbs down.

FORWARD SOVIET!

 

 

Sat, 05/18/2013 - 09:34 | 3575577 WestVillageIdiot
WestVillageIdiot's picture

How dare you question "the most transparent administration" ever.  He hasn't lied.  He has just withheld information that would have been painful for us sheep to handle.  And I thank him for that. 

This is really frightening.  Every day I look around and see the hole that this country is in deepen.  The character of the people around me seems to atrophy on a daily basis.  To see armies of human rhinos tooling around on motorized scooters provided by Medicare and Medicaid is depressing.  But Hover-Round sales must be good for GDP.  I see drivers texting, with no regard to anybody other than the stupid fucking "OMG u r kidding" messages they are writing.  I see public officials that don't even pretend to serve the people.  There are armies of sheep that have gone from questioning government to being good little foot soldiers for the vile twats that our propaganda media calls "leaders". 

This article shows the decay that is running through the American nation.  Just split the damn thing up and be done with it.  Undo the disaster caused by Dishonest Abe when he destroyed the constitution in 1861.  That is the only path back to freedom for any Americans but I think we all know that will be the path never taken. 

Sat, 05/18/2013 - 15:19 | 3576231 buyingsterling
buyingsterling's picture

Yes, secession is the only answer. Texas (and perhaps Oklahoma) first, then the south and midwest will follow. They can contract with the federal government to supply a nuclear deterrent, and commit to help 'pay down the debt' when that starts to happen (not gonna happen). The left bitches about the drain the red states put on the government, so when they start killing secessionists they may be finally seen by every sane person as the rabid death cult that they are. We need to remove ourselves from their control. A robust secession movement is inevitable, might as well get on with it now.

Sun, 05/19/2013 - 11:37 | 3577806 El Viejo
El Viejo's picture

Texas could supply all seceeding states with all they need: Oil, Air Force etc.

BTW the rebellion in the Soviet Union was not against Communism. It was anti-Totalitarianism.

Sat, 05/18/2013 - 11:39 | 3575782 Yes_Questions
Yes_Questions's picture

 

 

Every day I look around and see the hole that this country is in deepen. 

 

worth repeating.

 

+ another 1000 

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