This didn't get a lot of attention over the Christmas-New Year break. The Congressional Budget Office released its assessment of key issues to consider in the debate over health care reform. As the Wall Street Journal summarized, CBO has found that expanding health care coverage is likely to be very expensive, and the cost savings promised by Democrats are unlikely to materialize:
...CBO expects government outlays on Medicare and Medicaid to rise as a share of the economy to 6% from 4.2% in a decade -- to $1.4 trillion, or nearly 30% of the entire federal budget -- and eventually ruin federal solvency. If costs grow on pace, U.S. medical spending will rise to 25% of GDP in 2025 from 17% today.
The liberal solution to this looming catastrophe is to add even more obligations. The insurance program for children that Democrats plan to expand in January will cost an extra $80 billion over the next 10 years. Preventing automatic cuts in the reimbursement fees that doctors receive for treating Medicare patients -- as Congress does every few years -- runs to $556 billion.
Those are nothing compared to the centerpiece of the universal health-care agenda -- a "public option" to provide government insurance for Americans of all ages and incomes. In one scenario, CBO finds that allowing the nonpoor to buy into Medicaid would have net costs of $7.8 billion over the next decade. If that sounds like pocket change, keep in mind that Democrats want to make both the public option and private insurance less expensive for beneficiaries by transferring the extra costs onto the government. Just one subsidy plan CBO examined would run to $65.5 billion by 2019. Having the government assume responsibility for high-cost claims would hit $752 billion.
CBO rolls through 115 of these reform options -- and it quickly becomes evident why even Democrats concede that their new health programs will cost $150 billion or even $200 billion per year. The real numbers will be higher. Keep in mind, too, that these are new recurring obligations, not one-time spending like (presumably) the financial bailout. They're politically unrepealable programs that will remain for decades.
Read the whole thing. The Journal points out that the man behind this report is former CBO Director Peter Orszag, who will serve as Obama's first director of the Office of Management and Budget. Given that, it will be hard for Obama to ignore these warnings.
Barack Obama plans to 'stimulate' the economy to the tune of $850 billion or so in his first month in office. Then he hopes to pass a plan that offers tax cuts to most Americans, without a way to pay for them (remember that he plans to forego repeal of the Bush tax cuts for several years). And once those measures are signed into law, he plans to expand health insurance coverage at a cost of perhaps more than $200 billion annually.
Is America really ready for a quick $2-$3 trillion in new deficits?