Obama Double Talk: He Says Health Plan Won’t Add to Deficit: Part 3

Stanley Feld M.D.,FACP,MACE

 

Between Thursday July 15^th and Friday July 16^th the President and the House committees somehow persuaded Douglas Elmendorf, head of the Congressional Budget Office, to change his assumptions and score the healthcare reform bill budget deficit differently. He had been very definitive on Thursday July 15^th. It is hard to believe that the next day the negative scoring of the House bill could drop from 1.5 trillions dollar deficit to a $239 billion deficit over the next ten years.

“Late on Friday, hours after two House committees—Ways and Means and Education and Labor—approved healthcare reform legislation, the Congressional Budget Office (CBO) had bad news: HR 3200 would result in a net increase in deficit spending of $239 billion during the next 10 years, according to its analysis. But House leadership immediately challenged the findings—and CBO changed its tune hours later.”

 

How did administrative pressure manage to change this number overnight? Republicans are not demanding an answer.

“The House bill, CBO said, was able to target key areas for savings. However, a key trigger in increasing Medicare spending occurred when the existing annual "sustainable growth rate" (SGR) in the Medicare physician fee schedule (with a 21% reduction in payment rates scheduled for 2010) was replaced with an inflation-based update.”

This calculation was done using today’s inflation rate. What if inflation skyrockets to 10 or 15%? The bill would create a deficit of greater than 1.5 trillion dollars in 10 years.

CBO estimated that those changes in the physician payment rates ultimately would add up to $245 billion in changed physician rates between 2010 and 2019.

Who are they going to hurt? The weakest link is the physicians because they are the most disorganized and lack leadership and effective representation.

Meanwhile the traditional media has immediately stopped publishing the $1.5 trillion dollar deficit in the “news” this week and replaced the deficit with the $239 billion dollar deficit.

“Peter Orszag, director of the Office of Management and Budget (and former CBO director). "The only reason that the bill shows a deficit" is because of the "payments to physicians…once you take that part out, the bill is deficit neutral," Orszag told Fox News on Sunday.”

This is exactly how you cook the books. You recalculate the figures using assumptions to your advantage. President Obama now has his deficit neutral bill. Magic!!

“Those reformed Medicare physician payment costs, however, should not have been included. CBO’s net calculations, according to a release from the three House committee leaders issued.”

“ Instead, they will be absorbed under the upcoming statutory "pay-as-you-go" budgetary legislation that currently is pending in the House. (With so-called "paygo," the federal government cannot launch new tax cuts or entitlement programs without finding a way to pay for them.) This would make HR 3200 deficit neutral over the 10 year budget window—and even produces a $6 billion surplus.”

If anyone wants a bridge I have one to sell. The deficit money will come from another pot.

“It also would create Medicare and Medicaid savings of $465 billion, coupled with the $583 billion revenue package reported by the Ways and Means Committee on Friday. It would "fully finance" the previously estimated $1.042 trillion cost of reform, which will provide healthcare coverage for 97% of Americans by 2019, the House committee leadership said. About 17 million nonelderly residents would be left uninsured (about half of whom would be unauthorized immigrants).”

It is unbelievable. We still have 17million uninsured. It is no wonder the House and Senate’s approval rating is so low. If the American public believes all this nonsense they will deserve what they will get. Only public opinion can stop this train. When it is all over there will be too few physicians taking care of patients just as there are too few physicians taking care of Medicaid patients.

“CBO and the Joint Committee on Taxation said that approximately $583 billion would be obtained through increasing federal revenue by methods such as issuing a surtax on higher incomes, which was approved by Ways and Means on Friday. Another $219 billion (plus physician payments) would be saved by Medicare and Medicaid by:

• Making permanent reductions in the annual updates to Medicare’s payment rates for most services in the fee for service sector (excluding physicians’ services)—yielding budgetary savings of $196 billion over 10 years
• Setting payment rates in the Medicare Advantage program based on per capita Medicare spending in the fee for service sector—providing savings of approximately $156 billion over the 2010 2019 period.
• Changes to the Medicare Part D program to establish a new prescription drug rebate program for those eligible for both Medicaid and Medicare.”

After all these manipulations of the numbers they have the gall to make the following statement:

"This fulfills the strong commitment of the President and House leadership to enact health reform on a deficit neutral basis," said the release signed by House Committee Chairmen Henry Waxman (D-CA), Charles Rangel (D-NY), and George Miller (D-CA).”

President Obama then says he is correct. He told us he would not sign a healthcare reform bill that was not budget neutral.

President Obama has previously said that he would not sign healthcare reform legislation that was not budget neutral.

Can President Obama be trusted with numbers? His numbers were wrong with the economic stimulus package and we trusted him.

The unemployment rate today is 9.5% — nearly 20% higher than the Obama White House said it would be with the stimulus in place. Keith Hennessey, who worked at the Bush White House on economic policy, has noted that unemployment is now higher than the administration said it would be if nothing was done to revive the economy. There are 2.6 million fewer Americans working than Mr. Obama promised.

The President did tricks with the numbers to pass the economic stimulus package. All of this seems much too confusing to the traditional media and their love affair with President Obama. We are not getting critical reporting.

“

The Blue Chip consensus is an average of some four dozen economic forecasts. In January, the consensus estimated that GDP for 2009 would shrink by 1.6% and that unemployment would top out at 8.3%. Team Obama assumed both higher GDP growth (it counted on a contraction of 1.2%) and lower peak unemployment (8.1%) than the consensus.”
T

he calculations for surplus and deficit depend on the assumptions applied. If you make the wrong assumptions you can get numbers you like. If you make the correct assumptions you might get public disapproval.

So why should we trust President Obama and his Democratic controlled House committees with the assumptions about health care costs? The goal of the present administration is to dominate and control healthcare. Can you trust the administrations with your healthcare needs?

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.