Actuarial tables apply to government insurance just the same as to private insurance.  The Government has no cost advantage. All of history screams the contrary. What Government does not have is shareholders; only taxpayers and creditors on the one hand, and unions, medical professionals, hospitals, lobbyists, etc. on the other hand, and all of the above as medical consumers on the third hand, torn between their costs and benefits.

Insurance companies are said to operate as near monopolies or price-fixing cartels. Just how do they enforce their cartel pricing? There are hundreds of small insurers who have carved out niches in the system. Are there artificially high barriers of entry to the health insurance business? Every time you hear someone complain about excess profits in any industry, ask why the complainers can’t just start their own company and undercut the excess profit seekers.  Insurance can even be provided by mutual companies, where the policy holders get all the profits. That sounds a bit like the cooperatives being proposed in Congress.  If the barriers are really too high, consider

• Free Competition Principle:  Simplify the requirements for forming a new (mutual or not) insurance entity. If you think insurance companies are making excess profits, form your own company and compete. It can be a full fledged insurer or a buying cooperative. Just convince investors or a hundred thousand of your closest friends and you will soon discover the power of free markets. Permit policy shopping across state lines. Unions, charities and progressive non profit organizations should be encouraged to compete.

Unfortunately, the analysis in part 3 of this series shows that there is little fat to be trimmed in the private sector. Free choice is a good thing in and of itself. Local monopolies may be overcharging in some cases. However it is naïve to think that any significant savings will accrue to consumer by increasing competition in the private sector.

Unless the facts are very different from the ones cited in part 3, there is also no money to be saved simply by replacing private insurance by public insurance, whether single-payer or as an option. The idea that a politically driven price negotiator will do better than profit seeking enterprises flies in the face of logic and experience. ( Can you spell c-o-r-r-u-p-t-i-o-n?) So does the idea that insurance executives do not keep administrative costs to a minimum, constrained by the rules and regulations they must follow.

As to a single payer system, what is it about health insurance that leads anyone to believe it will be any more cost effective? One quick analogy is public funded education. Imagine if the federal government was the single payer.  Don’t you think Nancy Pelosi, Rahm Emmanuel, the leaders of teachers’ unions, and Ed School professors everywhere lie awake at night dreaming of this?  They could control the curriculum and bleed the taxpayers dry. After all, you can’t trust the local yokels to make good decisions on education any more than they can manage their own health care.

Before the current system is overhauled, with all the risk that entails, should it not be proven that money will be saved?

Interestingly, the eight White House mandates did not address the plight of the uninsured directly. Keeping people from losing insurance because of temporary economic setbacks is covered at unspecified cost.

Insuring the chronically uninsured is harder, and seems likely to add well over ten percent to health expenditures. That may sound small, but actually comes to more than a quarter of a trillion dollars a year, or over 2.5 trillion for ten years. Since all the other proposals also cause cost increases, it is hard to see how the ten year total can be held under five trillion dollars. FIVE TRILLION DOLLARS!!!  Yet the number crunchers at the CBO cringe at having to project even a single trillion dollars in cost for ten years. Would they like to guess if a marginal tax rate of 100% on income over a million dollars a year would help to close this gap? If not, then the not so rich will have to foot the bill.

Health Care Math 3: Private Profits and Waste

                                                                                    By Dr. Mike Razar

It is undeniable that the following question is central to any discussion of the details of the health care system.

Can the Government provide health insurance at lower cost than the private sector?

It is no exaggeration that the current debate is about whether hatred and lack of trust for private insurers is greater than hatred and lack of trust for the Federal Government. Liberals pretty much believe that insurance companies could be profitable by charging much lower premiums and accepting all claims without question. However, Government can be trusted to fairly ration care and have the rich pay for most of it. Conservatives would rather take their chances with competitive profit seeking corporations than with political appointees.

No matter how one feels, there is a void where agreed upon facts ought to be. Here are a few facts that might be useful.

1. Insurance companies are frequently accused of putting profits ahead of people. Just how much money could they save if they were run by “progressives”? It should be easy to agree on what percent of each premium dollar goes to the bottom line.  The most cited figures fall into the 3% to 4% range. If this is true, then an across the board premium cut of 5% would bankrupt the industry. Hardly profit gouging. If anyone has hard facts to the contrary, it would be useful to put them forward. Insurance companies are accused of spending millions of dollars paying people to deny legitimate claims.   The evidence is largely anecdotal and there are appeal mechanisms available for quick review. The fear of large punitive damage penalties further acts as a brake to abuse. Nevertheless, it is fair to ask why the companies even bother to deny any claims. The net effect of paying claim investigators must be cost effective, or else they really would not bother. If the profit to premium ratio were high, it would be worth a close look. But if there is less than 4% to work with, it seems likely that failure to scrutinize claims would also lead to bankruptcy. Progressives seem to think that claim denial by government experts is somehow superior to private sector denial. The principles proposed in Part 1 would go a long way toward reducing the need for close calls on what is covered
2. Charges of excessive compensation abound not just in the insurance business, but in every business except for attorneys, movie stars, rock stars, athletes and super-models. Are shareholders not willing to pay lower salaries for the same talent? Why don’t they pay less?  Could it be that better executives actually earn their salaries by generating more profit?  Anyone who disagrees can start a new company to compete. 
3. Are compensation packages really lower in non-profit companies than in profit seeking companies? They probably are at the very top, but it is doubtful that below the top few executives, there are any meaningful differences. Cutting executive pay will not lower premiums significantly.
4. To be fair, critics assert that the category of administrative costs is 10% to 25% of each premium dollar (excluding profits and taxes. The fact that these costs seem pretty uniform across the industry suggests that there is little fat to be trimmed here. As in the case of compensation, anyone who can be more efficient can cut premiums while increasing profits.  It would be interesting to compare the overhead costs in not-for-profit or mutual insurance companies with the profit seeking behemoths.
5. It is difficult to get accurate comparable costs for Medicare because government cost accounting is designed to hide the truth. Claims that creating dozens of new federal agencies and czars will cut administrative costs are highly suspect and should be scrutinized carefully.
6. Reliable primary sources for data on total health care premiums and profits in the private sector are not easy to find. Here is a crack at estimating thes
7.                Total Annual Health Care Spending                   $2.5 Trillion
8.                Total Premiums                                                 $600 Billion
9.                Total Profits From Premiums                             $20 Billion
10. Ten year economic projections, particularly without standard deviations and particularly ones made by the fool’s gold standard of economic projections, the Congressional Budget Office, deserve harsh scrutiny. It is claimed that more competition would drive down premiums. By how much? By at least enough to insure 40 million or more uninsured Americans and to pay for all the White House mandates. If ALL the profits were diverted to those 40 million people, it would provide $500 per person. That is only 5% to 10% of the amount spent per year on the average person. There are always the hypothetical administrative costs which leading progressives overestimate with abandon, but the mandates and the uninsured are going to be competing for any savings from cutting those costs.
11. The most one can hope for from more competition among private companies, with or without a public competitor is to drive profit margins to zero and to save a small part of the administrative overhead. This applies to both liberal proposals to have a public option and conservative proposals to allow interstate competition. There simply isn’t enough profit for enhanced competition to make a difference. 
12. Anyone who thinks there are enough savings available from cutting administrative costs should be more explicit. Which costs incurred by private companies would be eliminated by a federal agency?
13. One place where universal coverage is expected to lower costs is in the use of emergency rooms as a form of primary care by the uninsured. On the surface this seems like a major area to cut expenses. After all, ERs charge more than ten times as much for routine visits as private physicians and clinics. Would universal insurance change this? The math does not seem to support this.  The reason the math is not there is that the argument ignores the primary cause of the high cost of emergency room visits, namely overhead. It is expensive to outfit and staff an ER at a hospital. In addition to direct costs and overhead purely due to the ER, cost accounting assigns to them a share of the overhead of the entire hospital. Even with the high prices, ERs routinely lose money according to these figures. If you have a heart attack, you depend on the hospital overhead to save your life. That is not true if you have a simple fracture or sprain or a strep throat. The overhead needed to keep the ER open for serious trauma victims covers a lot of underutilized resources that must be available 24/7. Using some of that slack to treat non-emergencies is actually a cost effective way to cover some of that overhead, and would still be so at a small premium to ordinary care. At the margin, routine care at the ER is way overpriced.
14. The preceding paragraph reflects the complexity of cost accounting in medicine. How do you price an MRI?  How sure does a physician have to be that the MRI will find something bad to order one?  It is easy to hurl charges of defensive medicine at tort lawyers but if YOUR life or YOUR close relative’s or friend’s life is at stake, one chance in a thousand is more than enough. This is particularly true when you look at the marginal cost of a single MRI, rather than the fully amortized cost.

Going back to profits, where do the profits go today?  Probably at least 75% of profits go to retirement funds and non-profit groups.  Each time the private sector is cut there is less opportunity for investors to provide for their future. How do progressives plan to make up for that?

                                                                        By Dr. Mike Razar

The Administration has put forth some goals for private insurance.

a.       No Discrimination for Pre-Existing Conditions

b.       No Exorbitant Out-of-Pocket Expenses, Deductibles or Co-Pays

c.       No Cost-Sharing for Preventive Care

d.       No Dropping of Coverage for Seriously Ill

e.       No Gender Discrimination

f.        No Annual or Lifetime Caps on Coverage

g.       Extended Coverage for Young Adults

h.   Guaranteed Insurance Renewal

Goals b, c, e, and g are not particularly expensive, but only redistribute the responsibilities for various costs.

Goals a, d, f, and h are expensive to implement. A related issue is the need to limit coverage contractually and the mechanism for rejecting uncovered claims. Another is the issue of changes in qualification for various plans. This often occurs when people changes jobs and is tied to the problem of pre-existing conditions.

There is no sense mincing words. These goals will be mandates

Mandate a:

The popular outcry for insuring pre-existing conditions sounds like a good idea to most politicians. In fact it is a classic case of other people’s money being easy to spend.

Nobody can deny that there is a value to uninsured people in having an option to buy insurance anytime they anticipate an unexpectedly high medical bill. It is the job of actuaries to price this option depending on the current age and condition of each person.. This is not an easy task.  The first problem is that this option is being granted to essentially every uninsured individual in the country. There is no easy way to measure the risk profile of that pool and to estimate the probability that any one of them will try to buy insurance from a particular firm.

Another reason it is so difficult is that there is a feedback loop between the consumer’s decision and the provider’s price. After all, if you are going without insurance until you need it, which company will you choose when you have that surgery you never guessed you would need? It is any easy choice. You go to the company offering the lowest cost for the best coverage. It is an example of the well known problem of adverse selection.

Will uninsured individuals will be able to game the system?  Surely, an annual penalty at the ten or fifteen percent level of the cost of insurance will do little to discourage this.

From the insurer’s point of view, there is value in discouraging these consumers from choosing their company to get the newly needed coverage. It would be better to have them choose a competitor. That is just the opposite of the usual goal of setting a price. They have an incentive to set prices higher and provide less coverage. But wait a minute. If they do that, then they will lose their regular customers to competitors. Catch 22!

I do not know how actuaries can figure out how to set prices in this environment. It is hard enough to project the probabilities of various risk groups needing medical coverage. The introduction of these perverse incentives creates a wild card which will be tough to price.

The most efficient way to eliminate this problem, without requiring everybody to buy insurance, is to create a national risk pool of the uninsured. Then either private companies or the taxpayers must pay for the care of members of that pool when they get sick enough to need insurance badly enough.

The practical result of mandated coverage of pre-existing conditions will be to increase premiums and reduce coverage because it is more important to the shareholders to lower risk to the company than to expand market share.

Mandates d, f, g, and h:

When someone buys life insurance, typically a physical exam is required. If the applicant passes the exam, the insurance is permanent as long as premiums are paid. This is not always the case for health insurance policies. For a company to drop coverage because of illness seems completely unfair and unethical. Mandating coverage to young people in their twenties by allowing them to remain on their parents’ policies is just a special case of guaranteed renewals.  Unlike the case of pre-existing conditions, guaranteed renewals can be fairly priced into a policy if the pool is large enough. Undoubtedly, a small increase in premiums is needed, but that is reasonable.

The lifetime cap is similar. Whether coverage is dropped due to a serious illness or due to exceeding a cap, it is a problem.

These three mandates seem susceptible to reasonable actuarial calculations. So where are these calculations? Doesn’t Congress have a duty to ask for them?  The CBO doesn’t even come close to grappling with these costs.

Someone has to pay for these mandates. Some of the costs will be covered by premiums paid and some by government subsidy. Any bill which fails to explicitly allocate and quantify the responsibility for such payments is flawed.

Mandates b, c, and e:

Mandate b is simply cost shifting. It makes little difference to the big picture whether deductibles and co-pays are reduced in exchange for higher premiums. Pay it now, or pay it later.

Mandate c simply dictates that the cost of preventive care be actuarially allocated to premiums.  Pay it now or pay it later.

As to mandate e, the costs of pregnancy and other gender specific conditions must be spread over the pool of all individuals regardless of age or gender. This pool seems to be in the spirit of providing free education to all children and medical care to older folks. No matter how these costs are allocated, the total needed remains the same.

The bills before Congress try to deal with these problems with the sledgehammer of federal law by simply disallowing certain practices by insurance companies. Changing the mixture of premiums, deductibles and co-pays saves nothing. Why are progressives so anxious to limit consumer choice in this area?

Funding the costly mandates will require a substantial increase in premiums to cover the additional actuarial costs.  How much would premiums have to go up? Surely it would be useful for someone to come up with realistic estimates based on facts, not just wishful thinking, before these new mandates are enacted.  The Federal Government has to live with the same actuarial facts as private insurers. The only way to keep premiums the same or lower is to subsidize the insurance. Obviously, that puts private companies at a distinct competitive disadvantage to any public plan and will ultimately drive them out of business. Progressives are happy with this outcome because it speeds up their goal of a single-payer system run by political appointees. They should not claim that this saves money unless they can point to specific savings.

These mandates are actuarially expensive. Forcing private insurers to pay for these mandates introduces a wild card into their premium setting. Actuarial science is already very difficult. It is doubtful that any member of Congress has a clue how premiums are calculated. Blustering about immoral profits is not helpful.

Whether insurance is public or private, only the government can be the insurer of last resort when claims rise above some level. No private entity can realistically cover a pandemic which hospitalizes half the population. It is not obvious how the limits should be defined, but the government must play a role in dealing with catastrophic costs to an individual, a family, or an insurance company. Passing this responsibility to the states as an unfunded mandate accomplishes nothing. All legislation being considered includes some form of catastrophic insurance. There is opposition to plans consisting only of catastrophic insurance, but it is an essential component of all proposals, whether explicitly or not. At the same time there is opposition to tort reform which leaves physicians and their liability insurers in a desperate situation with regard to very high awards.  With that in mind, it is proposed that the government fund some version of the umbrella for all parties.

This principle is likely to be controversial, especially with conservatives. Catastrophic insurance has a bad reputation and a rocky history. Still, not just in health insurance disasters, but in all disasters, there is an implied promise that government will be there. If you doubt this, think back to Hurricane Katrina. This was not always so in American history, but it is today. That fact should be acknowledged so that straightforward mechanisms can be created to implement it fairly and efficiently.

Here is a simple, concise proposal. 

The government should provide an explicit high deductible umbrella to protect individuals and private insurers from health disasters, no matter the cause.

This is the first in a series of related posts.

Whether one looks at the 2000 page Democratic plan or the 200 page Republican plan, costs must be analyzed.

Let’s pretend the CBO knows what it is doing. How could it go about making reasonable estimates about the cost of reform and how to pay that cost?  It could start by making simple lists of where expenditures must be raised, where they can be lowered, and where revenues can be increased.

Some of the numbers pertain to public expenditures and some to private ones. This distinction should be carefully delineated.

Here is an attempt at such a list without the numbers. The numbers to be filled in are annual numbers estimated actuarially or otherwise. Each line should be derived from a more detailed worksheet with explanations of why those estimates seem reasonable.

1)      Higher Costs:

a)      New mandates for all health insurance

b)      Insurance for the uninsured

c)      Total new costs (add lines a and b)

2)      Cost Savings

a)      Reduced or no profits

b)      Net lower administrative costs

c)      Savings from less fraud and abuse

d)      Lower prices from providers

e)      Reduced benefits (rationing), especially from Medicare

f)        Savings from more preventative care

g)      Total lower costs (add lines a through f)

3)      Higher Revenues

a)      Premiums from the newly insured

b)      Higher premiums from the insured

c)      Taxes or penalties from those who refuse insurance

d)      Taxes on private insurance

e)      State subsidies (higher taxes or borrowing)

f)        Federal subsidies (higher taxes or borrowing)

g)      Total higher revenues  (add lines a through f)

The rest is easy. Just add lines 2e and 3g and subtract line 1c. If they are not equal, adjust line 3f and pay for it with still other taxes or borrowing.

Don’t let anyone tell you that these calculations are just too hard for either Congressmen or ordinary taxpayers to understand. The numbers should be published and publicly debated. Anything less is a violation of the rights of a free people.

Attacking Sarah Palin, frustrated town hall attendees, and Fox News may be great sport, but passing unintelligible 2000 page bills with unknown rules and obscure costs built in, is hardly consistent with the oaths of office taken by Congress.

The true purpose of the bill is to expand the control of health care standards by the federal government. Dozens of new agencies and czars will preside over the fiercest attack on our individual liberty since King George gave up his failed attempt to suppress the rights of a free people.

Medicare recipients will be shunted to hospices by “quality of life” panels to save them from the indignity of aggressive treatment. The economy will be crippled by new taxes. Physicians will retire early, necessitating ever more stringent rationing.

Congressmen and executive appointees will get special treatment as they are more important to society than ordinary citizens. So will the weasels running big business as they rush to cheat their shareholders by collaborating with the bureaucrats. Maybe a few important media celebrities will also be bought off with access to better care.

Late term abortion on demand, known as choice to its proponents and murder by its opponents, will be expanded to infants who have no adult advocate of the expense to treat them.  Peter Singer and Zeke Emmanuel will be honored for their progressive ideas.  

None of this requires a government-owned insurance company. The private insurance executives will be the most enthusiastic cheerleaders for the new system in return for their own special privileges. Just as the capitalist vestige of Wall Street surrendered this year with nary a whimper, so will the pathetic remnant of insurance companies and providers, in return for a few years of privileged status.

The cowardly blue dog democrats will cave in to the power-corrupted Nancy Pelosi and Harry Reid. Go ahead patriots. March on the Capitol.  Flood their mailboxes. My heart is with you but my brain says you are wasting your time. It is time to formulate a  plan of action to delay, forestall, impede and disrupt the four year transition to Obamacare, pending the 2010 and 2012 elections.  Only with a resounding rejection by the voters which elects a majority in Congress to repeal, or even just fail to fund the new federal health empire, can we snatch our precious liberty from jaws of voracious progressives.

Each president recites the following oath, in accordance with Article II, Section I of the U.S. Constitution:

“I do solemnly swear (or affirm) that I will faithfully execute the office of President of the United States, and will to the best of my ability, preserve, protect and defend the Constitution of the United States.”

Each member of Congress recites a similar oath at the beginning of each of his or her terms in office.

“I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter: So help me God.”

Do these oaths really mean anything? I am unaware of any case where any elected official has ever been prosecuted for failure to honor the oath. No criteria are given in the oaths for what constitutes a violation. Short of a conviction for treason, it is hard to imagine the oath being enforced.  If it is not a criminal matter or even a civil matter (interesting thought), how can the oath be enforced? One way is for voters to enforce it at the ballot box. Perhaps it has been done many times. There is no way to know for sure.

As Congress and the President embark on a path to save or destroy the American health care system, depending on whom one believes, it is fair to ask if they are honoring their oaths of office. Physicians used to swear to adhere to The Hippocratic Oath. Alas, modern medical ethicists (people who think they know right from wrong better than the rest of us) have found the Oath to be a bit too restrictive. In particular the practices of euthanasia and abortion are forbidden by the Oath. Mere oaths cannot be allowed to be a barrier to progress.

Our progressive rulers have been violating their Oaths so thoroughly that it is hard to understand how they can look in the mirror without blushing. This year alone, on multiple occasions they have voted on legislation which could threaten the very solvency of the United States if they have miscalculated. We elect them to make hard decisions affecting the whole nation. We hope that they will exercise good judgment in doing so. They are our fiduciaries and should perform due diligence our behalf.

Ask yourself a question. If you hired an attorney to help you understand a contract and relied on her advice that you can sign it, how would you feel if it transpired that she never even read the contract first? That would be cause for disbarment for failure to follow the ethical imperatives of the legal profession.

How much more must a failure of our elected Congressmen to even vote for a piece of legislation be a violation of their Oaths of Office, if they have not bothered to read it?  If it is really necessary to have such long bills that not all of them can read these bills, then those who do not read, or who do not thoroughly understand it, it should vote Nay or abstain. Otherwise, how can they know they are bearing allegiance to the Constitution? The President gets to take one last look before signing it. The poor President had better be a speed reader.

This is hardly a new problem. But I would wager that it did not start during the administrations of Washington, Adams and Jefferson. Until this year, this unpleasant practice was largely unnoticed. As in the Emperor’s New Clothes, once it becomes apparent, it can no longer be ignored. At first it was a bit of a joke, but as one thousand-page bill after another was passed with NOBODY in Congress reading it, with trillions of dollars of deficit spending being committed, the laughter has turned to derision. Just to rub salt in the wound, the progressive leadership decided that waiting a few days so that the press could try to understand what was in these bills would cause an intolerable delay. Do our elected officials really believe they are defending the Constitution from all enemies, like American citizens who disagree with them?

If you listen to the rhetoric from our progressive rulers, progress depends on bending their Oaths a bit.  After all, if anonymous young staffers fresh out of Ivy League law schools who draft the bills cannot be trusted with trillion dollar decisions, then who can be trusted?  Who is better equipped to risk the economic and physical health of the entire population? How refreshing it would be if those who took the Hippocritic Oath would answer these questions.

There have been complaints that illegal aliens will be included. Don’t be afraid. That’s great news! If we can just rope in 10 million of them, that should save another $4 billion a year off the deficit.

But why stop there? I bet we can convince 60 million more Mexicans to accept subsidized health care from the American taxpayer. That’s another $24 billion in annual deficit reduction. It’s too bad that the total deficit cut of $36 billion barely dents our trillion dollar annual shortfall.

Canada has such a small population, that it hardly merits consideration. Besides, they all love their current system. We have to think out of the box. Where can we find a few billion people to insure?  I know! China…and India. They should be good for 2.5 billion people. Hooray! That’s a cool trillion—-every year.

Now the CBO screwed up the ten year projected deficits earlier this year. It will take at least $2 trillion a year to balance our budget. Think of the benefit to the rest of the world. They get superior health care and no need to buy our debt.  I think we can scare up another billion or so people and pay off the whole debt in 20 years or so.

Talk about doing well by doing good. This is America at its finest. The whole world will have high quality health care and we will be free of debt. Think of the surpluses we can generate if the world adopts cap and trade! Who needs capitalism? The world will love us. And your modest author will humbly accept the Nobel Peace Prize.

Politicians and pundit of all stripes have blamed the recent debacle in the financial markets on un-named greedy bankers who risked the entire world financial system just so they could buy a better penthouse in Manhattan. Yet today we have politicians relying on number crunchers whose methods they don’t understand, using assumptions that no rational person would accept. Is that not a risk? If they are wrong, America can look forward to decades of economic instability, while half the world can just starve.

The problem is that NOBODY this side of Heaven can reliably predict next year’s economy, let alone ten years from now. “But it’s the best we can do”, I hear them whine. Well, no. It is easy to do better. How do I know that? Heh heh, I am a REAL expert. But I’ll violate the expert code of silence just enough to tell you how I know that. Actually, all I really know is that I have no idea what the economy will do between now and 2020, and I sure don’t know how much new legislation will exacerbate the problem.

The CBO methodology is actually quite simple. It has to be. It is prescribed by law! They make some assumptions about inflation, interest rates, and GDP. Then they assume that nothing will be done by Congress to mess up these assumptions. Then they use spreadsheets and digital computers and blackberries to calculate numbers to 76 decimal places when no more than 70 can be justified. (That is a joke for the mathematical elite among you.) Then they release a single number as the ten year deficit projection. They are the gold standard, if by gold you mean fool’s gold. You do not need an advanced degree to understand that hidden in those assumptions and calculations are numbers whose actual values could be way off. Many of those numbers are not even possible to ever know accurately, even after the fact.

So what can we do? We can examine the impact of various economic and legislative scenarios on the deficit projections. We just can’t predict which scenario will come true. The deficit ultimately depends on two numbers: the average (compounded) growth in revenue and the average growth in expenditures. So I did what any self-respecting geek would do. I cranked up a spreadsheet and made a table showing all the possible ten year deficits that could arise from average growth rates of revenues and expenditures between 1% and 10%.  I can’t say for sure that this range is adequate but it seems a reasonable first step. The best scenario is 10% average growth in revenues combined with 1% growth in spending. That gives no deficit and no surplus. Every other combination produces a deficit. So forget about balancing the budget.  The most optimistic scenario I can imagine really occurring is revenue growth of 3% and spending growth of 5%. That computes to a deficit of $25 trillion. Slightly more pessimistically, revenue growth of only 1% combined with spending growth of 8% slithers in at $37 trillion. Either scenario bankrupts America