Not Much Bang For A Lot Of Bucks

The Congressional Budget Office (CBO), scored the health care reform legislation which is coming out of the Senate Finance Committee, headed by Sen. Max Baucus. According to the CBO, this bill will cost approximately $829 billion over 10 years. Also according to the analysis, the Federal budget deficit will be reduced by $81 billion during that time.

The budget analysis cautions that the total cost projection and the concomitant savings "assume that the proposals are enacted and remain unchanged throughout the next two decades, which is often not the case for major legislation". Really? A Federal Government program might have overruns?

A really interesting part of the analysis indicates it relies on cost cutting that really is not that likely to occur. From the CBO analysis:

"The projected savings for the proposal reflect the cumulative impact of a number of specifications that would constrain payment rates for providers of Medicare services. In particular, the proposal would increase payment rates for physicians’ services for 2010, but those rates would be reduced by about 25 percent for 2011 and then remain at current-law levels (that is, as specified under the SGR) for subsequent years. Under the proposal, increases in payment rates for many other providers would be held below the rate of inflation (in expectation of ongoing productivity improvements in the delivery of health care). The projected longer-term savings for the proposal also assume that the Medicare Commission is relatively effective in reducing costs—beyond the reductions that would be achieved by other aspects of the proposal—to meet the targets specified in the legislation. The long-term budgetary impact could be quite different if those provisions were ultimately changed or not fully implemented."

Let's not kid ourselves that all of the assumptions, legislative changes and productivity gains upon which this analysis lays are likely to occur. If these things happen, it will be the first government program in my lifetime (and the lifetimes of most living Americans) that stayed within its proposed limits.

More importantly, this $800+ billion conversion of our private health care system into a government run and/or regulated behemoth won't have that great an impact on reducing the number of uninsured. According to the CBO, the percentage of Americans covered by health insurance will rise from the current 83% to 94% over the next decade.

Wasn't the reason for all of this to get all Americans covered? We're going to spend $829 billion to insure an additional 1% of the population per year ? Is that the real problem? How does any of this bureaucratic nightmare cause health care costs to go down? It appears that, at best, we are just shifting the costs from employers and individuals to the taxpayers.

Is this really worth the cost and the risk that our current system will be wrecked beyond repair?

UPDATE: Check out this report from the Cato Institute (via Instapundit) analyzing the full cost of the Baucus bill. Cato pegs the number at closer to $2 trillion than $829 billion. If Cato is right, the country will have a very hard time getting out of the financial hole being dug for us by Pres. Obama and the Democrat Congress.