CBO’s score: Cloudy with a chance of bankruptcy

March 18, 2010

Peter_Pitts–Peter J. Pitts is President of the Center for Medicine in the Public Interest. The views expressed are his own. –

Today, the Congressional Budget Office released its latest estimate of the price tag of the Democrats’ health reform package. At $940 billion, this version of reform will cost more than the measures passed by the House and Senate late last year. More is not always better.

CBO also says the bill will reduce the deficit by $130 billion over the next 10 years and by $1.2 trillion over the following decade. That’s right. It will reduce the deficit by significantly increasing federal spending.  Only in America.

While they’re at it, they should also predict the weather for the next decade.

Let’s face it: Uncle Sam has a poor track record of forecasting how much new programs will cost. Medicare’s progenitors, for example, stated in 1967 that the entitlement would cost $12 billion by 1990. Actual Medicare spending in 1990 amounted to $110 billion — nearly 10 times the initial estimate. Oops.

CBO’s deficit-reduction estimates are further divorced from reality because they don’t include as much as $371 billion in new spending to fix reimbursement rates for doctors who treat Medicare patients. Imagine that — health reform legislation that doesn’t include payments to doctors. Only in Washington, DC.

Absent congressional action, Medicare reimbursement rates will fall 21 percent next year. Congress has no intention of letting that happen. But the Democrats have decided that they don’t have to include this so-called “doctor fix” in their healthcare reform package — even though it’s critical to preserving Medicare.

No wonder the CBO was able to conclude that the Democrats’ health reform package would reduce the deficit by $130 billion. The bean-counters simply ignored the $371 billion in spending needed to fix Medicare reimbursement rates.

Democrats point to the favorable CBO score as proof that their health reform package is a model of fiscal responsibility. But it’s likely that the next generation of lawmakers will look back on these cost estimates with the same astonishment reserved for Medicare’s naïve forecasters back in 1967.

6 comments

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Where do you people (Reuters) find these “analysts” every time something favorable to the White House is reported? Nobody complained that CBO has bad track record when it reported that health care reform would cost more then what the government was saying.

Posted by frank654 | Report as abusive

Simply irresponsible. Shame, shame, Reuters.

CMPI is well known as a pharmaceutacal funded orgnanization doing whatever it can to spread misinformation about legislation which is going to cut the cost of drugs.

Even if you didn’t know this, you would guess that CMPI has a dog in this hunt by the Pitts uses broad sweeping generalizations and by the wide ranging condemnation of the CBO, which is pretty well thought of.

This is a far cry from honorable journalism, and your silly little disclaimer does nothing to change my view. Are you going to be journalists or are you just going to play at it?

Posted by cmar | Report as abusive

Great insight by PJ Pitts.

With nationalized healthcare the whole USA will become like Detroit.

Posted by linus71 | Report as abusive

The problem is that, because the states share in the cost of these federal entitlement programs (especially Medicare and Medicaid), much of the cost in over runs will fall upon the states.

Practically every state in the nation is already cutting back on higher education. Personally, I think colleges should just eliminate sports (the only college athletic programs that make money are the top ten football teams) to save money, not eliminate entire academic programs.

Most athletic scholarships are for Black athletes, and they are notorious for skating through on grade school academic abilities. Obama wants a “Rush to Excellence” in education – let’s start with college athletes, and require them to have Notre Dame level smarts. College is for learning not sports.

Many states are already cutting back on k-12 education as well. Detroit closed 40 schools, Kansas City almost as many. These closings are in Black, inner-city communities that don’t have the tax base.

Arguably, the Black community stands the most to benefit from this Health Care bill. 99.9% of Blacks form Obama’s Revolutionary Guard, supporting him righteously on this and other social welfare issues.

So be it. Let them have their Health Care. Once their schools start closing by the boatload they’ll come running to Washington for another $1 trillion dollar bail out. But guess what? There won’t be any money left.

Medicaid is already bankrupt. This bill will exacerbate the problem.

Social Security is worse than bankrupt; they’re having to cash in IOU’s from the Treasury Department from funds Congress has siphoned off Social Security for the decades now.

Apparently bankrupt-this-year isn’t good enough. The new norm is bankrupt-for-the-next-decade. This Health Care bill bankrupts us by this new norm, spending all our disposable income for the next ten plus years.

This is what we get when the 50% of Americans who pay no taxes are all Democrats, and they demand government to provide more of the same – free education, free schools, free colleges, and now free medical care.

Soon they will pay the cost of all this: no jobs. Ironically, a decent job is the best education, the healthiest activity, and the most life-enriching thing of all. At least they have their guns and their churches to depend on in hard times, like Obama so famously said.

Personally, I think we should be spending all this on a $1 trillion jobs bill. If kids can’t hack regular high school, send them to vocational school to learn a trade. If they still drop out; well, there’s always a military draft for people who need some discipline and direction.

Hiel to the Chief.

Posted by BTUBill | Report as abusive

ah, numbers, schnumbers….I want the $3 trillion we spent in Iraq back

Posted by Story_Burn | Report as abusive

Mr Pitts argues by ridicule rather than by facts and analysis. Only in America. He challenges the idea that increasing government spending can result in a net cut in the deficit. He does this on behalf of a party that has argued since 1980 that cutting taxes will increase revenues. An idea can be counter-intuitive and still be correct.
I would have been interested to see a real analysis of the accuracy (or, I suspect, lack of accuracy) in CBO estimates. That is why I read the article. The best I got was one anecdote from 1967 about the cost of Medicare estimate for 1990. Did Mr. Pitts correct for inflation and for the extraordinary, unexpected run-up in the cost of health care as a % of GNP from 1967 to 1990? He did not, although those were the main reasons the 1965 estimate was so far off.
I look for both analysis and opinion in such columns, but found neither here. What I found was slurs, smog and misrepresentations. Am I on the Reuters site, or have I become lost in Murdoch land?

Posted by tallshipper | Report as abusive