The Greatest Show on Earth

Posted on October 9, 2009. Filed under: health care | Tags: , , , , |

Step right up: A new entitlement that cuts the deficit!

Washington spent the week waiting for the Congressional Budget Office to roll in with its new cost estimates of the Senate health-care bill, and what a carnival. Behold: a new $829 billion entitlement that will subsidize insurance for tens of millions of people—and reduce deficits by $81 billion at the same time. In the next tent, see the mermaid and a two-headed cow.

The political and media classes are proving they’ll believe anything, as they are now pronouncing that this never-before-seen miracle is a “green light” for ObamaCare. (What isn’t these days?) The irony is that the CBO’s guesstimate exposes the fraudulence and fiscal sleight-of-hand underlying this whole exercise. Anyone who reads beyond the top-line numbers will find that the bill creates massive new spending commitments that will inevitably explode over time, and that this is “paid for” with huge tax increases plus phantom spending cuts that will never happen in practice.

The better part of the 10-year $829 billion overall cost will finance insurance “exchanges” where individuals and families could purchase coverage at heavily subsidized rates. Senate Finance Chairman Max Baucus kept a lid on the cost by making this program non-universal: Enrollment is limited to those who aren’t offered employer-sponsored insurance and earn under 400% of the poverty level, or about $88,000 for a family of four. CBO expects some 23 million people to sign up by 2019.

But this “firewall” is unlikely to last even that long. Liberals are demanding heftier subsidies, and once people see the deal their neighbors are getting on “free” health care, they too will want in. Even CBO seems to find this unrealistic, noting “These projections assume that the proposals are enacted and remain unchanged throughout the next two decades, which is often not the case for major legislation.” Scratch “often.”

Then there are the many budget gimmicks. Take the “failsafe budgeting mechanism” that would require automatic cuts in exchange spending if it increases the deficit. CBO expects 15% reductions in exchange subsidies each year from 2015 to 2018, even though the exchanges don’t open until 2014. That kind of re-gifting should have been laughed out of the committee room, but the ruse helps to move future spending off the current budget “score.”

Read the rest at Wall Street Journal

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