Uncategorized — March 13, 2010 at 10:01 am

Lowering the budget with health insurance reform


One of the most frequent claims I hear from people opposed to health insurance reform is that “we can’t afford this” and “this will our raise taxes”.

The fact of the matter is that this country can’t afford not to do this. What’s more, not only does this not cost the country more, it actually will cost us LESS, lowering the deficit over the next decade by about $130 billion according to the Congressional Budget Office (CBO). This means that it meets President Obama’s goal of “not increasing the deficit by ‘one dime’.”

So much for the claim that we can’t afford this.

So, how does it do this? Is it giant tax increases on all Americans as the anti-reform folks would have you believe? Is it a precipitous drop in the quality of services as they so often say? Let’s take a look at the CBO’s analysis of the Senate bill to see where the money is coming and going from.

First, the CBO says that government outlays for increasing the number of insured Americans (subsidies, primarily) will increase by $599 billion over the next ten years. In addition to covering more Americans, there are increases in the amount of money going to Medicaid and the Children’s Health Insurance Program (CHIP), and tax credits for small employers. This brings the overall increase to our budget to $848 billion.

However, there is an increase in revenue from an excise tax on high-premium insurance plans. These are the so-called “Cadillac plans” that provide far more than basic coverage. This increased revenue is $149 billion. There is also net savings to the tune of $100 billion from other sources, according to the CBO.

Saving are also being achieved through changes to Medicare, Medicaid and other federal programs related to health care being enacted that reduce the amount of waste, fraud and inefficiency in these programs. This is not a reduction in services or a “slashing of Medicare” as Republicans would have you believe. This is things like preventing overpayment of services for the Medicare Advantage program, a wasteful program that does not provide enhanced services that make up for the increased services. How much is saved through this? A whopping $491 billion.

Keep in mind this from cutting waste and fraud, two things the Republicans harp on endlessly. Yet, when it is proposed by the Obama administration, the hypocrites in the GOP use fear-mongering to say NO! by describing it a “cutting Medicare benefits”.

This is a lie.

Finally, there are tax provisions of various sorts primarily related to increased fees and taxes on health insurance companies, additional taxes on cosmetic surgery and things like that resulting in $238 billion in increased revenue. You can read about these specific items in this report from the Joint Committee on Taxation (PDF).

So, let’s add it up:

Increases in government spending: $848 billion
Offsets to increased government spending: $249 billion
Savings from Medicare/Medicaid waste & fraud reduction: $491 billion
Increased revenue/taxes: $238 billion

Grand total: $130 billion in SAVINGS over the next ten years.

One thing to note is that the increased fees and taxes are predominantly on those corporations that will most benefit from the legislation passing: health insurance companies and medical device companies. These groups will receive a big influx in new customers. This does NOT raise taxes on American citizens or small businesses.

I’m just sayin’…