NEOAVATARA

The most recent CBO analysis of the Democratic bill , with the dubious name of the America’s Affordable Health Choices Act,  is sobering.

The cost of the the Democratic bill is $1.042 Trillion over 10 years.  That itself is not even totally honest.  That number considers that the majority of the spending will occure in the latter five years of that 10 year span, as the program slowly ramps up.  Additionally, the Democratic bill has huge new tax increases on the wealthy, that are being taken into account.  This is something the White House is opposing…which would increase the overall costs of the bill, and add to the deficit.  In all practical reality, the cost is still around $1.6 trillion, before any new taxes.

The CBO adds a couple caveats.  First, they are presuming that the draft bill will not change, and no new entitlements will be included…and unlikely prospect.  They note the draft resolution they received has already been changed…and that the current version has not been provided to the CBO for analysis.  Wonder why…

Specific provisions of the bill include:

• A health insurance exchange, that would allow individuals greater choice in buying insurance; this also supposedly includes the much maligned government-funded public option.

• No exclusion for pre-existing conditions.

•Tax credits for low- and moderate-income individuals and families, available to those with incomes up to 400 percent of the federal poverty level, or $43,000 for individuals or $88,000 for a family of four.

• Limits on annual out-of-pocket spending.

• Expanded Medicaid coverage to individuals and families with incomes at or below 133 percent of the federal poverty level.

• An individual mandate, with a penalty of 2.5 percent of adjusted gross income for non-compliance.  This is something Obama made fun of McCain and Hillary Clinton during the campaign.

• Requirement that businesses with payrolls exceeding $250,000 provide their employees with health coverage or contribute up to 8 percent of their payroll on their behalf.

The program still lacks major cost controls, including rationing.  No malpractice reform is included.  And here is the most ridiculous part:  17 million people will remain uninsured under the Democrat Plan in 2020!

So after a trillion dollars and a decade, we only solve about half to two thirds the problem.  I don’t get it.

Second, CBO clearly states that federal administrative costs to integrate one sixth of the U.S. economy has not been included in the costs.   I have stated this before…the real 10 year projection is closer to $2 trillion, once you include all the other red tape costs that will have to be spent.

Finally, CBO estimates the cash that will roll in to the program once taxing of health benefits, taxing of the rich, and other benefit payments roll in…factors that are highly likely to come under debate.  It also only estimates the proposed tax increases.  House leaders offered no specifics on tax increases at a news conference introducing the bill. Bloomberg.com reported that the bill includes a 5.4 percent surtax on couples earning more than $1 million, with a 1.5 percent surtax on couples with income between $500,000 and $1 million, and a 1 percent surtax on incomes over $350,000.

So basically, this is a sustainable health care plan in name only.  After 2015, the plan starts becoming unsustainable.  It will yearly add about $300 billion to the already ballooning deficit.  So how exactly will this benefit most of us?  The increasing costs will force the government to restrict care, which is the natural response to overspending.  That, in turn, must lead to rationing, because the huge tax increases (among the largest in American history, again, under this administration) will not easily be repeated to fill holes in later years.

Republicans, after seeing this bill, are finally unified in opposition.  They understand that this system is not like Social Security circa 1935; a program that was able to stay afloat.  This is an albatross.  This is a system that neither confronts the real problems in health care, increasing costs, and instead plans to give everything to everyone, but just pays for it through the government instead of through private insurers.  That is not reform…it is simply a government takeover.

If Democrats focused on the things that I think are more important (cost control, universal coverage, changing the bad policy of defensive medicine, etc.), we could have real reform in this country.  But instead, they have avoided every tough question that has come up.

Even Democrats are balking.  Moderate Democratic Senators, especially those that are up for election in 2010, are going to be hard pressed to vote for this bill, and then defend it in their home states in the coming election.  People are not stupid; they understand what adding an additional $1 trillion means.  They also understand that number is a on the low side.

The more I look at this, this more I don’t see this as an ideological fight.  Most of us agree that some kind of health care reform that reaches universal coverage is necessary.  But what this is about is competence.  First, this bill does not achieve universal coverage, even in 2010.  It does not provide any significant cost controls.  It doesn’t provide tort reform, a major cause of the practice of defensive medicine.  This is a failure of competence, not of politics.

What a mess.