“The ‘spin’ surrounding the Trustees Reports will largely involve what the new health care bill did and did not do to ‘solvency’ and other metrics. Unfortunately, the real ‘news’ in the reports is that the window for reform to slow the growth of these programs and to keep taxes at historical levels has nearly closed. Program beneficiaries need to be told of changes before they retire so they can adjust their life plans accordingly. If someone knows in advance that Social Security benefits will be lower or Medicare Part B premiums higher, they can delay retirement and make other changes. When people are informed of these changes in retirement, that flexibility has been taken away, leaving them worse off. Yet, if reforms are passed in say 2013 (a soon but reasonable timeframe) and they exempt future beneficiaries within 10 years of retirement, the reforms will (or can only) address less than 40% of the entitlement cost growth. In short, the painful process of adjusting to a much larger government will have already been baked into the cake.”
“In the 2010 Annual Report of the Board of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, the Board warns that ‘the actual future costs for Medicare are likely to exceed those shown by the current-law projections.’ The Trustees Report is necessarily based on current law; as a result of questions regarding the operations of certain Medicare provisions, however, the projections shown in the report do not represent the ‘best estimate’ of actual future Medicare expenditures. The purpose of this memorandum is to present an alternative scenario to help illustrate and quantify the potential magnitude of the cost understatement under current law.”
“For the first time in Medicare history, the Medicare Chief Actuary has called the projections in a Medicare Trustees Report ‘unreasonable’ and ‘implausible’ and encouraged everyone to ignore them and view instead an ‘Illustrative Alternative’ report… The alternative report says that the number of facilities that would become unprofitable will grow to 25% by 2030 and 40% by 2050 if the health reform law is implemented as written.”
The Obama Administration released their Mid-Session Review of the budget outlook, and it isn’t pretty. “The primary threat to the nation’s long-term prosperity is runaway federal entitlement spending. Entitlement costs are set to rise so fast and so quickly that the implications for federal deficits and debt are staggering. If allowed to stand, the health law has dramatically reduced the flexibility of the federal government to respond to the coming budget crisis. It locks in massive new spending commitments, and uses every trick in the book to make it look like those commitments have been paid for.”
“This week the Obama administration released a report claiming that the new healthcare law will strengthen Medicare. This is a familiar theme from an administration that has received low marks from seniors, who instinctively know that cutting Medicare spending by $575 billion over the next decade will probably not do them any good. A cynical mind might also conclude that releasing this self-congratulatory message three days before the annual Medicare Trustees Report was meant to deflect attention from more bad news.”
“The Community Living Assistance Services and Supports (CLASS) Act is a new long-term care insurance program. The concept had floated around Washington for years before Congress inserted it into the Obamacare health law — most likely to provide a $70 billion piggybank that could be raided to cover up Obamacare’s initial deficits. Yet this ticking entitlement time bomb could cost future taxpayers trillions of dollars.”
“Proponents of Obamacare claim that it will simultaneously provide millions of Americans with health insurance and reduce the budget deficit by hundreds of billions of dollars. Yet Obamacare’s proclaimed budgetary discipline rests on unlikely assumptions and budget gimmicks—none worse than the CLASS Act, a national long-term-care insurance program. CLASS is essentially a Ponzi scheme that will run initial surpluses followed by massive deficits—virtually guaranteeing program bankruptcy or, more likely, massive taxpayer bailouts. The surest way to avoid this fate is to repeal the program—preferably before it enrolls participants on January 1, 2011. The Heritage Foundation’s Brian M. Riedl and Visiting Fellow James Capretta explain why repeal is the right action for Congress to take.”
“[S]pending on health care is clearly the most important source of the spending explosion. Remember that these data came out after Obamacare was passed. Thus, Obamacare does not address the explosive health care spending problem, which will come as no surprise to its critics, but is clearly contrary to the claims of those who supported it. Moreover, to the extent that Obamacare slowed growth in Medicare it more than offset this with new entitlements, making controlling health care spending even more difficult now. The data are clear: In order to control government spending, you have to start over on health care reform. Whether you call that “repeal and replace” or “repeal and reduce (the deficit)” the message is the same.”
The new health system in Massachusetts included huge subsidies to provide insurance coverage on a new exchange, but lacked cost control components. This is leading employers to drop health insurance for their workers and get the government to pick up the tab. ObamaCare has the same features and incentive structure, which means the national costs will rise sharply over previous estimates, just like in Massachusetts.
CBO Director Doug Elmendorf testified before the President’s Deficit Commission and said that ObamaCare will not cause any notable improvement in the long term deficit picture. And since the law has lots of guaranteed spending which is paid for with speculative, future cuts, it might make things much worse.