Monday, October 19, 2009

Health Reform: $1.03 Trillion And Counting

Let's be honest, shall we?

It seems the Congressional Budget Office's prediction of the cost of the Baucus bill, some $829 billion dollars, was only achieved by removing Congress's pledge to abolish the "sustainable growth rate" adjustment for physician pay, saving the bill some $200-240 billion dollars in costs over 10 years. Instead, this portion of the health care legislation was carved out and placed under a separate bill, S. 1776 as an "accounting trick."

Lord knows how many other pieces of legislation have been similarly extracted from the original health reform bill for budgetary expediency.

Interesting that the press never seems to mention this.

So, by my most optimistic calculations so far, the Health Care Reform package will cost U.S. taxpayers about $829 Billion (Baucus Bill) + $200 Billion (S. 1776) = $1.03 Trillion.

Does anyone else know of other legislation similarly created to "balance" the reform budget?



joegrind said...

...actually this was mentioned on all the Sunday morning talk shows (not sure or interested about Fox News). Their reasoning for leaving it out of the Baucus bill according to them, is that this would be debated on whether Healthcare reform was on the table or not this year....a more plausible explanation than the previous 'fuzzy math' that came from DC in the past.

Andrew_M_Garland said...

Healthcare legislation is modeled after the famous TV commercials:

Healthcare reform, available now for the very affordable price of $823 billion (*).

Think of all the free healthcare you will get in the future (**).

There is no need to pay us now, and we already have your credit card number (***). But, we always like to hear from you. (Compliments only, please.)

Delivery guaranteed in 30 days (****) or double your money back.

You have our unconditional guarantee (*****).

(*) Plus $200 billion shipping and $1 trillion handling.

(**) Subject to the participation and availability of doctors, hospitals, clinics, and midwives. Some copayments and bribes may be required.

(***) Members of Congress, federal employees, (working or retired), and Designated Important People (DIPs) are excluded from this offer, because they get all of these benefits and additional benefits FREE.

(****) Shipped in 30 days, or up to 3 years, whichever we find doable.

(*****) All promises and representations are subject to increase, decrease, alteration, and/or revocation for any reason or no reason whatsoever.

Keith said...


It is dishonest for the politicians to put this item in without coming up with the cash to pay for it. However, I am not so sure how the math is worked out given that the amount of money that is being added to the budget over last year is considerably less than the 240 billion or so they are talking about.

Keep in mind that congress has recinded these cuts for several years, and instead of fixing the inherent problems with the SGR formula, they have been kicking the can down the road. Now there is an honest effort to confront the issue and fix it once and for all, which is a step in the right direction. The increase in the cost over last years payments to physicians is actually only the 1-2% raise. 240 billion is what doctors would end up losing if the entire enchilada was finally taken out according to the SGR formula from the inception of the SGR.

So the question is 240 billion more added to the budget of what year? If you take the last republican budget under George W, then there is virtually no increase in payments to doctors from the budget this year. If you consider the several years of Congress altering the formula, but never recinding it, then it is about 240 billion.

I would tend to look at the whole SGR formula as a complete disaster and would tend to take the position that it should have been done away with 10 years ago when the problems were first recognised. If you assume growth in physician payments were otherwise fair and went to cover appropriate medical care, then the case for saying it adds significantly to the deficit needs to be looked in the context of growth in other areas of the federal budget (military, unemployment assistance, social security, etc) since they all are contibuting to our deficit.

The biggest contributer to the deficits were the Bush tax breaks coupled with the Iraq and Afgan wars and don't forget the wonderful drug plan for seniors that was passed with absolutely no source of funding at the time!

joegrind said...

@Keith...don't get me started on the Dubya 'tax-cuts'...never before in all mankind , has a country been at war (we're in TWO, mind you) and taxes been cut. I guess only the 'troops' need to sacrifice. And of course now the right is up in arms because now the Commander-in Chief actually is putting some thought before sending 40,000 troops into an 8-year battle...that he is somehow showing weakness for not immediately sending what McChrystal recommends....seeing that these are just 'troops' and not people with lives and families.
But I digress.
So if $1.03 trillion is too much, how much should health reform be?

joegrind said...

Just wondering what your thoughts are of the alternative House GOP's only 230 pages (yippee?) covers 3 million uninsured (per the CBO) and among those 230 pages, I couldn't find the words 'illegal, pre-existing conditions' in the same sentence.

So you have a red pill (the GOP alternative) and a blue pill ( all 4 bills: Obamacare) or the status quo. Which would you take?

DrWes said...


No choice is perfect, but the data from the CBO regarding the Republican plan are interesting. There seems to be less financial risk with their plan, but it is by no means perfect.

There are two conflicting problems as I see it: (1) too many uninsured and (2) health care promises to backrupt our country if nothing's done to control costs and costs of treating the uninsured will add significantly to the price tag.

The way I see the Republican proposal is that it costs about $61B rather than $1.1 trillion and MIGHT save costs to the system over 10 years but at the expense of no real change to the uninsured problem. It is, in effect a much smaller step toward "reform." I still feel that if Congress claims they can save $500 Billion in Medicare costs through eliminating waste, fraud and abuse, then they should start there and fix Medicare before overhauling other aspects that are working. When realized, those cost savings could be put toward the uninsured. In reality, though, somehow I think we're being fed a bunch of spin about the savings that can be realized by rooting out waste without cuts to the care delivered.

Furtunately, there is still a lot of low-hanging fruit for cost savings that Congress is ignoring due to powerful lobbies that grease their pockets. Take the advertising lobby for instance: stopping direct-to-consumer advertising of drugs on the nightly news would offer significant savings to drug costs.

What's sad is how the whole process got started (inviting all the health care "stakeholders" to the table). Rather than developing a team of bipartisan representatives to canvass what works in other countries so we might implement the best practices of others here, we've gone the special interest route. The former idea probably would have made too much sense. Instead, we're now sitting with the current choices that promise to do too little to affect change or cost too much and treaten our long-term solvency as a country.

No wonder Americans outside the beltway are disgusted.

joegrind said...

Dr. Wes, I agree with you that none of the bills are perfect. I also agree that none do enough to control costs. We can all play Monday morning quarterback and come up with better means to the end than what has transpired over the last year. If that $500 trill is true that waste can be eliminated, by all means, do it....but is it the initial cost ($1 trill) that will 'threaten the solvency of this country' I agree with you when you say Pharma is spending all this money to their products to consumers...but that would also mean limiting the give-aways, dinners and 'conferences' that many practitioners are invited to. Based on your last post, you are rightly concerned about the creation of another entitlement program. But of the current programs out their....they may be inefficient, costly and poorly managed but they arguably have helped this nation at some point in history. Yes, politicians spin everything so it appeals to their base and it takes the discerning eye to be able to differentiate fact from garbage. My main problem with the liberal side of the bill is: nothing regarding tort reform. I do believe they are taking the right approach to making internal medicine more appealing. I also disagree with them going about by 'taxing the rich' Yes, the wealthy made huge gains during the Dubya years, but they also earned their income. Obama keeps making these absurd promises about not raising taxes on the middle class...that is ludicrous. But as the CBO stated, the GOP plan covers 3 million and cost 61 billion. Roughly $20K per individual. The Pelosi bill costs 1 trillion and covers 36 million....or $27K per person...(forgive me as I'm having my evening drink at the moment...but has more deficit-saving tools (ie. EHR, CEE etc). In the end though, when the GOP had both congress and the Whitehouse, they spent their political capital on starting a war and lowering taxes. Reform has been on the table for 60+ years....never attempted during the boom years or anything. Obama needs to get out of the trial lawyers' pockets and push through a bill which is so far, at least 85% good... On a separate note, thanks for your thought-provoking blogs