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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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the murican sheeple about to get just what they deserve. And Fuck You Obama
Oh, yea they're going to get it good and hard, from both ends, repeatedly. They'll find it hard to bleat with their mouths full.
w v i = + another 1000
freedom has cost us freedom because of the nature of humans.
lazy, apathy, dumbness(numbness) and influx of eater/low iq'ers has lead the nation to demise.
i look around on any given day and see the dumbest mutha fuckin shit and ask myself how did this come about?
darwin is our savior, is all i can say...
Oh, and the IRS thinks we are "Customers". Are a bunch of brown kids blown up in a drone strike considered "poor customer service"?
When I heard the IRS talking about "Customer service", I new we had reached levels of Doublespeak that Orwell couldn't dream of.
oh my God............ thank you for the laugh... i really needed it
memo line on a physical check is like a mini ZH post...
+1000 Excellent!!
IRS-Obamacare is going to cost every man, woman, and child $400 a month just for premiums, and then the family deductable will be in the thousands, and, of course, even the best plan will stick you with 10% of hospital charges, which will be easily in the 5 figures for the most basic procedure, and probably 6 figures.
Bankruptcies will make the last 4 years look like a vacation.
Note to Dems: Propose scrapping IRS-Obamacare and replacing it with Medicare/single payer, and do it before the 2014 election.
IRS-care is like buying car insurance that covers gas, tires, windshield wipers, etc., and you have to buy it from GM or ExxonMobil.
I have to remember to switch my party from Libertarian to Democrat - I want to be damn sure I get care should I get sick...
I predict conservatives will get less care, wait longer in line, and die in pain.
No stent for you, tea party lackey.
I predict disciplined conservatives like myself will exercise daily and stay well away from any doctor or hospital (last saw mine 7 years ago, I usually check in for a chat every decade or so). good health is not related to health care as every study has demonstrated. Its genetics, sanitation, exercise and diet. Fat, lazy people die young. Here's a secret from a doctor: Everyone dies and most do so in pain-health insurance won't help you on that point. Pray you're not unfortunate enough to do so in a hospital surrounded by machines and strangers looking to empty your estate before the big dissconnect.
+ 10 Mr. Coltrane. That analysis is right on the money !!
Yep
Acute care we're good at. Bad car wreck, internal bleeding, you can survive that now. Chronic conditions, prevention, that's up to you.
I haven't seen a doctor in close to ten years. Check my bp every now and then. Cholesterol checked when I changed jobs two years ago. Exercise and not smoking to prevent heart disease. Not getting cancer is diet, not smoking, genetics and luck.
@duo -- "even the best plan will stick you with 10% of hospital charges, which will be easily in the 5 figures for the most basic procedure, and probably 6 figures."
Not that I'm defending Obama, but you clearly don't understand the basics of insurance.
There is a max out of pocket feature of every policy I've ever seen. Your expenses should max out at a few thousand per year. If you don't have that you need to shop for another plan ASAP before you get clobbered. It's really the only reason for having insurance. Think about what you're saying before making idiot comments.
The max-outs are still going to be brutal to the middle class, on top of premiums being 2-3x what they were 2 years ago.
The uninsured are paying 5x for services that the insured are. I suppose you think that is fair.
It will be far worse than you describe, and yes, single-payer is, was, and has always been their goal.
Bawney Fag admitted this.
Leftists and statists have deliberately destroyed healthcare, education, retirement, and basically everything else, making it far more attractive to relocate internationally.
Then they’ll be shocked at the lack of tax revenue.
+1. As a self-employed person with a family, I'm already in this boat. My wife has a job that pays for almost all of her insurance, but the cost to insure me and our two kids would eat up her entire paycheck. So I buy a $10,000 deductible policy that covers me and the two teenaged kids. It's about $405/month in premiums. I can't say it's a total waste of money, even though we never get near the premium. Our daughter's 7th grade volleyball physical, plus two booster shots, was billed at $980. After the insurance adjustment, the bill to me was $180. Insurance didn't pay a penny, but $800 got knocked off the bill. So that was two months worth of premiums.
That's really the problem. The clinic could just knock $800 off the bill? They're still open; seem to be doing fine. So why would they start out charging that extra $800 in the first place? If an uninsured family ran up that charge, they're unlikely to be able to pay it, as most people who could pay it would have already bought insurance. Is this just a subsidy to the collections industry?
Employees whose employers are footing the bill have no idea there's an additional $15,000 in the total cost of their compensation; no wonder they never get a raise. Actually, they did get a raise; it just all went to the finance sector. The one positive thing I've seen so far is that now the cost of health insurance is on employees' W2 forms. My wife thought I was out of my gourd when I kept saying her coverage was costing her employer a minimum of $500 a month. Finally this year there it was, right on her W2.
Of course Obamacare is a cluster. Obamacare is just a can-kicking exercise, letting the health care finance sector and the interests milking the current system (Pharma, devices, clinic and hospital ownership) wallow in the trough for one last round of looting before they price themselves out of business and reality sets in. Already the prices are so high many employers and middle-class individuals can't afford insurance. It's as much as many people's mortgage, for family coverage.
This isn't new, either. People could see this 20 years ago. That's why the Clintons ever started talking about "HilaryCare" in 1993. Finance already got 20 more years of looting, and they're taking full advantage. Now that it's clear they're pricing themselves out of business, their puppet in the White Hose is buying them a few more years before it all comes down.
Of course the only solution is to open up Medicare to everyone. I stick to my prediction that the next Republican President will do exactly that, to thunderous acclaim from employers, as a job-saving measure. And except for those who think everything is a Communist Plot, it will be hugely popular overall.
Medicare for everyone would bankrupt the coutnry immediately and the single biggest expense added to the federal gov't the last 50 years was the MMA Act of 2003 which gave seniors prescription drug coverage (Medicare Part D) without any definied source of tax revenue to pay for it.
"Of course the only solution is to open up Medicare to everyone."
That may be the only 'solution' (edit: action) which our cowardly 'leaders' can think of, but it's the precise opposite of a solution. Better to revise medicare to make it catastrophic care only, and require cash payment for everything else. Of course that means giving money to people for medical savings accounts to cover everything else, but at least that brings some savings incentives into the equation.
It would make sense to go back to "Major Medical," where you paid a reasonable fee for everything and only filed an insurance claim for a catastrophic charge. To do so would require that medical costs be reasonably priced, so that people could afford them. That won't happen. Right now you aren't just paying your doctor and his reasonable costs of operation. You're paying all that, a squadron of executives and paper-pushers, lawyers, their insurance, their benefits; then there's another few layers of executives, advertising executives, etc., etc. That's why at least 40% of your insurance premiums go to administrative costs, in addition to the ridiculous price of health services.
Reminds me of when I quit my last job and went the self-employed route. I could charge a third less for my services than my former employers had, work about a third less, and still make double what they had paid me. It's a lot cheaper when you only have your own family to feed, and not a half-dozen levels of bureaucracy (some with quite expensive tastes).
The system is going to have to collapse before it gets fixed. A critical mass of people will have to not be able to pay their insurance, or pay for services; a critical mass of employers will have to stop providing health insurance; a critical mass of people will have to bankrupt out of medical bills and the mandatory insurance or fines. That's what it will take.
Yes.
The answer is less insurance, not more. Pay cash for routine things you know are coming and use the insurance for the truly big ticket items. Watch costs plummet.
Very true. But it's very hard to be the first to try it, in the realm of health care. Especially if you've got kids. One big medical issue and you're done.
And have you ever tried to get a price estimate at a clinic? I do it every time, if only to be a pain in the ass. Most of the time they flat-out won't tell you. I go through a now-standard routine that I don't ever buy anything without getting an estimate first; not car repair, a new furnace, a roof, nothing; but they act like asking for an estimate at the doctor's office means you should be turned in to the Child Protection authorities, because any decent human parent would pay absolutely any amount to keep the kids healthy. About that point in the conversation I just drop it.
I do think we will end up returning to the sensible course you describe. But it's going to take reaching the tipping point, first. A critical mass of people are going to have to not be able to pay for the kinds of insurance we have now, which aren't really insurance but pre-paid medical care plans.
Swmnguy- you're on fire in this post. And you're speaking for me. I'm right there with you on this, because you're living it like I am. I also have what I call a "toy" medical plan. Mostly, I'm paying out of pocket for everything until I hit my high cap- INCLUDING PRESCRIPTION DRUGS.
Totally agree about the response you get when you ask them for an estimate. You should see their heads explode when I start to NEGOTIATE the price after they give me that estimate! "..... and if I pay cash, what will you charge me?" I even thought of asking "..... and if I pay you in GOLD, what will you charge me?" I have to admit, it's a bit tough to negotiate price when you're doubled over with a kidney stone, though.
Does anyone serious think Medicare is a solution? It's inefficient, bankrupt (as is the government) and relies on a Ponzi scheme of pretending we're actually paying for the services we receive. Such a fiasco will inevitably lead to the deep rationing Europe is now undergoing.
Same old story. Those who pay taxes and follow the rules, will be hardest hit. Our premiums are approaching $18k/yr not counting deductibles and co-pays. Five years ago it was $12,000. My wife was told to expect a possible 30% rise over the next three years (Tennessee).
When she griped he reminded her of California where rates will rise AT LEAST 50% and probably 70%. CA resembles the US - a few rich folks paying the bulk of the taxes and a large zombie sub-class. Naturally rate hikes will only increase the stampede of the productive class out of the state.
until tort reform gets passed, you can forget about getting cheaper healthcare. No way. No how.
All these countries with socialized medicine don't allow lotto-style lawsuits and (more expensively) the necessity of defensive medicine.
And guess who coincidentally owns the democratic party?
You mean, does the american bar association donate heavily to the DNC?
CYA medicine costs tons.
The VA system gets better outcomes with less money (poor service too). They standard for malpractice in the VA system is gross negligence, not whatever a jury of 12 people who don't have anything better to do than jury duty decide based on the "expert opinions" of paid experts. You don't pay an expert to say your case has no merit, do ya?
This is because Barry You has every intention of killing as many unproductive old farts as he can. What did anybody think those cuts in Medicare were about? A chance to throttle the holders of wealth and give old Barry You a crack at stealing all of it for his pals(and the glory of the Socialist Peoples Paradise).
FORWARD SOVIET!
Rahhhm!!!
"Mayor Rahm Emanuel plans to start reducing health insurance coverage next year for more than 30,000 retired city workers and begin shifting them to President Barack Obama's new federal system.
The move is aimed at saving the city money and comes as the Emanuel administration has been trying to wrangle significant pension cost concessions from employee unions."
http://articles.chicagotribune.com/2013-05-15/news/chi-emanuel-to-shift-retired-city-workers-to-obamacare-20130515_1_retired-city-workers-health-care-health-insurance
Stabbed in the back...how does that knife feel now? ;-)
Obamacare is all about shifting people from the private systems to a public system. Socialized, one payer medicine by increments.
And guess who coincidentally owns the democratic party?
The same people/corporate beasts that own the Republican party?
No, trial lawyers give almost exclusively (76%) to the democratic party. That's why there is never any tort reform.
Facts are subborn things. http://www.opensecrets.org/industries/indus.php?ind=K01
Fact: Lawyers are more parasitic than even bankers.
What the health system needs is competition, not monopoly via medicare or medicaid. These 32M additions will have no competent physicians to see them. Physicians are leaving in droves or only taking private (cash) patients.
Fact: Lawyers are more parasitic than even bankers.
Lawyers are employed by bankers both directly and indirectly through the political process. Contract law is really banker law. The sovereign has always been able to do as it pleases as it creates the legal apparatus, but bankers need the legal system to enforce their debts (contracts) that fall outside the sovereign.
Brothers Koch?
swmnguy
You hit the nail on the head. Obamacare will let some people feed at the trough, bumping up GDP, but the people compelled to fill the trough will have an equal and opposite reduction in spending, reducing GDP.
Any flouting of GDP without examining the other side of the equation GNI, is economic trickery. This country has a Gross National Income problem.
It is not magic money, only Bernanke has a bag of that.
only in a NWO ponzi/economy do they consider the sick care system, which sucks untold billions from the real economy, straight into the pockets of corporate beasts.... an utter disaster.
Corporate breasts... an udder disaster.
The charge is $980, but they only collect $180.
They can then show it as a loss and not pay any income tax on their earnings.
I wish.
Instead, I pay about 45%.
wrong. uncollected amounts is not a tax write off. I tried that........... believe ME
No they can't. The contract with the insurance carrier sets the price. It's not a discount or loss. It's one price for the public and another for the insurance company.
They collect $180 and still turn a reasonable profit. Welcome to Obozocare!
In Russia, many is learn home trade, like home dentistry and home surgery. Go to hospital if thing is get too messy.