This week a new cost analysis of the Healthcare Reform Bill was undertaken by the Congressional Budget Office (CBO). Surprisingly, (I’m being sarcastic) the new analysis projects a total budgetary deficit of over $300 billion as a result of the Healthcare Reform Bill. This is in direct contrast to the CBO’s analysis before the HRB was passed, which stated that the bill would reduce the federal deficit by $81 billion. It is important to remember that the CBO analyzes the budgetary consequences of any bill with the data that is provided to it by the bill’s sponsors. The CBO does not conduct any independent research into the accuracy of the information that is provided to it.
While this sharp about turn in budget projections after only a couple of months is disturbing, one needs to wonder about the accuracy of even these numbers. We need only to look back in history to get an idea of the accuracy of other budget projections on other major social policy changes in America.
The state of Massachusetts passed their own form of Government run (or mandated) healthcare insurance in 2006. This experiment in government healthcare insurance should give us a good indication of how well the national program might work. The governor’s budget for 2009 asked for $849 million for the healthcare program, $400 million more than in 2008, and is not sure if even this increase in funding will cover the costs. In addition to this massive increase in state funding, private insurance premiums have been rising 10-12 percent per year (about twice the national average) since the program became law. Total healthcare spending in the state has risen almost 28% since the law has gone into effect.
When Medicare was introduced in 1966 the initial annual cost was stated to be $3 billion. In 1966 the cost of the Medicare program was projected to cost the government $12 billion in 1990. The actual cost to the government in 1990 was $107 billion; a factor of almost 10 times the initial projection.
At the time of the passage of the Medicare Act in 1966, LBJ said words to the affect of, “If we had told the public the actual cost of the Medicare Bill, we would not have gotten it passed”.
What are the chances that similar thinking is taking place in Washington today?
