The price tag for Obamacare has gone from shocking to preposterous. In March 2010, the Congressional Budget Office estimated the ten-year cost of the law at $898 billion; by February 2013, that number had climbed to $1.6 trillion, and it is likely that further revisions will be in the upward direction. That is a very high price to pay for a system that will, by the admission of its own supporters, leave some 30 million Americans uninsured. Long gone is the fiction pronounced by President Obama and repeated by his media enablers that the law will not add “one dime” to the deficit; the latest estimate is that Obamacare will add as much as $6.2 trillion to the long-term national debt, according to the Government Accountability Office. No thinking person takes President Obama seriously on fiscal questions, but those alleged experts and pundits who argued for Obamacare on fiscal grounds should be regarded as thoroughly discredited.
As mind-boggling as its price tag is, expense is not the main reason to repeal Obamacare. What is not sufficiently understood is that Obamacare does not reform or regulate health insurance: It effectively abolishes health insurance. Health insurance functions by creating pools of beneficiaries large enough that the incidence of particular health-care expenses — for everything from heart attacks to injuries in car accidents — can be predicted by actuaries with some statistical reliability, thus enabling costs to be distributed among beneficiaries over time. Obamacare demands that all insurance beneficiaries be offered identical rates regardless of health-related variables, and severely restricts the kinds of plans that may be offered. The most important variable is, of course, the question of whether somebody already is sick. Under Obamacare, an uninsured person who develops a serious illness can demand that he be insured at a rate no different from that of a person who had been purchasing insurance for decades before he became ill. The “individual mandate” was supposed to prevent that problem by requiring all Americans to purchase health insurance, but it is a mandate that manages to be both too invasive and too lax at the same time: The mandate will invite the micromanagement of individuals and businesses by the federal government, but Americans will in many cases find themselves financially better off paying the tax for not getting insurance (as Chief Justice Roberts has reformulated the mandate) until they become sick and need insurance. Because of that defect, the main rationale for Obamacare — bringing all Americans into a large insurance market that can then be regulated and subsidized to bring it into accord with the tastes of the central planners in Washington — will prove impossible to realize.
[Update a couple minutes later]
Good news, if true — ObamaCare isn’t forever:
It is not hard to envision future reforms that peel back the onerous regulations of Obamacare, lowering the costs to the government, while keeping the 30 million or so new beneficiaries under the federal umbrella. From a Madisonian perspective, if the central political problem of Obamacare was that it created too many losers alongside its winners, then a successful conservative alternative would be a free-market approach that makes these losers whole again without depriving the winners of their new gains.
We’ll see.
The amazing thing is that al of this was not only completely predictable (despite what Queen Nancy said about having to pass the bill to find out what was in it) but predicted, and obvious to anyone with half a brain.
[Update a few minutes later]
The ObamaCare IT nightmare:
Wow, what can go wrong here? Let me assess this based on my years of experience in this industry. The federal government is going to build 50 exchanges, using a data hub that doesn’t exist physically and in fact, the design hasn’t been solidified, and must be accessible to a variety of data processing technologies that range from archaic to old. Each of the 50 states have different eligibility rules, and with a significant number of states opting out, the federal government now has to learn the intricacies of each state’s Medicaid eligibility models which then scale to different applicability rules for different members of a given family. The thousands of pages of bureaucratic rules that will drive requirements haven’t been completed yet, and those requirements are needed to drive design not only for the application programs, but for the entire processing architecture. The issue of network, processor, and storage performance has to be decided, modeled and tested.
To complicate matters, the convoluted federal procurement rules for hardware and software have to be adhered to, which require mixing different hardware brands, software packages and service providers. Add to this compliance analysis to validate and revalidate trusted sources of data. All legal requirements at the local, state, and federal level have to be met by the design.
And last but not least, staffing up for customer support which requires hiring, training on applications not yet designed and real world tested, the creation of support documentation, building or retrofitting facilities for these folks, setting up backup sites for the required redundancies, plus hardening the sites for natural disaster power failures. Additionally, the people hired must meet the Equal Opportunity criteria, and all GUIs must be handicapped usable, as well as the facilities themselves. I could be here all evening defining additional work to be done. Oh, did I mention this will be done by next year. Now I know why this has never been attempted. We are a country made up of 50 separate and distinct states, with all their own rules of governing, and to make things more unworkable are all the federal rules that have to be adhered to. I think we the people are going to be safe for quite awhile here.
[Late morning update]
ObamaCare will increase individual claim costs by 32%.
But other than that, it’s great.
Any pundit who cites the $6.2T number without qualifiers should be regarded as thoroughly discredited.
That figure is a GAO worst-case estimate of what would happen if Congress kept the parts of Obamacare that cost money, but repealed the parts of the law that raise revenue and control costs. Big surprise: the deficit goes up.
But that fantasy number has nothing to do with current law — it would take action by both houses of Congress and a Presidential signature to make the changes that result in the scenario modeled by the GAO. The only take-away message of the GAO analysis is that Congress shouldn’t make those changes.
It’s been nearly four years since Obamacare first came up for debate, and every single CBO analysis of the law as passed has indicated that it reduces the deficit. No amount of misdirection and name-calling changes that simple fact.
One does have to read ALL of the quote though:
First paragraph:
““The effect of the Patient Protection and Affordable Care Act (PPACA), enacted in March 2010, on the long-term fiscal outlook depends largely on whether elements in PPACA designed to control cost growth are sustained.” ”
Yeah….I’m sure the government of lawyers who cooked this hideous monster up know all about how to contain cost growth……..
“There was notable improvement in the longer-term outlook after the enactment of PPACA under GAO’s Fall 2010 Baseline Extended simulation, which assumes both the expansion of health care coverage and the full implementation and effectiveness of the cost-containment provisions over the entire 75-year simulation period..”
assumes FULL effectiveness of cost containment controls…….
Then there’s this minor issue on the very next sentence:
“However, the federal budget remains on an unsustainable path. ”
But not to worry – there’s always the Death Panel to save precious money……
whether elements in PPACA designed to control cost growth are sustained
Exactly. So sustain them.
Your religious belief that those cost controlling plans will work is touching. Controlling costs has been the Hallmark of Government planning for decades and has been highly successful (\sarc)
“Your religious belief that those cost controlling plans will work is touching.”
“Religious” indeed. The old-time libertarians didn’t call it “the Cult of the State” for nothing. And Baghdad Jim not only represents that Cult but the Obama-Zombie sub-cult as well. He’s a brainwashed Man for All Seasons.
You are upset someone used a worst case scenario and yet you want to use a best case scenario. Perhaps it will be someplace between the two, which would still mean Obamacare will cost more than promised and not just for the government but for everyone that has health insurance or participates in the health care industry.
Death Panels and Sales Tax will solve the problems, so sayeth Mr. Krugman.
Way to zoom in on one crack in one hoof rather than acknowledge the entire rotten donkey carcass lying in the room.
“free-market approach that makes these losers whole again without depriving the winners of their new gains.”
That would be mighty impressive. The losers have been assimilated. Managing to make an environment where new small competitors can form is plausible. But restoring the ones that have already ‘lost’ is like unmixing soup.
I’ve said before that we may turn out to be lucky on the timing of this. When our economy collapses due to the debt, then it will be obvious to everyone that we can’t afford Obamacare.
By contrast, Europeans have had socialized medicine for so long that they literally can’t imagine life without it. It will be much tougher for them when the crash comes.
Assumptions. This is how modeling works. Do they ever go back to see if their model fit history. No. Don’t have time for that.
Jim is telling us it will shower us with unicorn farts.
GAO is dealing with the federal budget. The slight of hand is the cost to states.
The slight [sic] of hand is the cost to states.
What cost? After 3 years they are on the hook for 10% of the cost of Medicaid expansion, but even then they’re free to turn it down. Most states won’t, because the economic activity generated by the 90% federal share will more than make up for that 10% cost.
Let’s see..from Debelius herself:
“These folks will be moving into a really fully insured product for the first time, and so there may be a higher cost associated with getting into that market,” she said. “But we feel pretty strongly that with subsidies available to a lot of that population that they are really going to see much better benefit for the money that they’re spending.”
So there it is. Jim gets to not only pay higher premiums, but he also gets to pay for those subsidies to low income people.
Jim must be catatonic with joy.
Typo – meant to type: Sebelius*
The price tag for Obamacare has gone from shocking to preposterous. In March In March 2010, the Congressional Budget Office estimated the ten-year cost of the law at $898 billion; by February 2013, that number had climbed to $1.6 trillion
A grossly misleading statement, based on comparing different time periods. Look at the year-by-year breakdowns from those estimates:
Year 2010 est 2013 est
2014 $49B $47B
2015 100 96
2016 158 153
2017 184 186
2018 197 206
2019 210 217
Where’s the “shocking” price growth? Especially when you consider that the 2010 estimate is in 2010 dollars, and the 2013 estimate is in 2013 dollars. In real terms, the estimated costs have fallen slightly.
The National Review should be ashamed for publishing such garbage.
Obamacare doubles in cost in one year? Triples in 2 years? Is the notion that cost are coming down because it then takes 5 years to quadruple?
Government integrating different software/hardware systems? Take whatever schedule and cost, multiply by three, minimum. Add politics, corruption and 50 states, multiply by three again.
“multiply by three again”
Well, aren’t you the optimist.
Try 30. At least.
(Actually, I’d go with 50 – or maybe 57.)
And, as per usual…..
when the Forbin Project is 200% over budget, and 100% late, The typical government solution will kick in …
“WEEEE NEEEED MOOORRRRRE MONEYYYYYYYYY!”
The House version of Obamacare had a single national exchange, rather than 50 state exchanges plus one for D.C.; it’s a pity the House version didn’t prevail.
Guess that is the type of thing that happens when you take a tax bill passed by the house, strip it of all the original text, change the name but keep the bill number, have the senate write the new text, and pass the bill in the Senate. What a pity.
Nothing born out of such a dishonest conception will turn out well but I am sure you think its ok for Obama and the Democrats to lecture us about ethics and morality.
If only Obama had had the power to veto this crap sandwich, then they could have gone back and come up with a better bill. It’s almost as if neither Obama nor the Democrats who passed it didn’t really care what was in it and only wanted the signing ceremony.
fully insured
Just like Cypress bank accounts.
“Just like Cypress bank accounts.”
This is key. Just because the government gives you something doesn’t mean they won’t take it away if it pleases them. They can violate contracts.
Private business can be sued for violating contracts and people thrown in jail.
Imagine the look on Jim’s face when his government supplied life magically disappears because it suits the government to do so in order to cover up other governmental eff-ups.