selise's blog


DrSteveB: The CBO Analysis We Really Need

June 22nd, 2009 by selise

This diary was posted at Daily Kos last week by DrSteveB, and is x-posted at oxdown and here with kind permission from the author


Todays kerfuffle over the phony release of the grossly incomplete CBO report, is a reminder that what we really need is a complete and honest analysis of all the major health care proposals out there.

Complete is the key word here, because most of what is being talked about, regardless of whether it is Enzi and Grassley, or Baucus and alas sometimes Obama, is just the Federal government cost. That is a dishonest, incomplete picture.

What about the costs to State government?

What about the costs to Employers?

What about the cost to Individuals/families/households…?

What about total costs to the U.S., in dollars and as a percent of GNP, showing whether it will really control total costs?

Fortunately, such an analysis and report was done in early 2009, but since it confirmed an inconvenient truth, it has been largely ignored.

What we really need is a complete, honest, side-side comparison of all proposals, including single payer.

That comparison must NOT bee limited to just the costs to the Federal government, but also the total costs (e.g., currently about 2.5 trillion and 17% of GNP) as well as the costs to State government, employers, and individuals and household of different income levels.

The closest we have is the analysis and report done by the liberal leaning pro-reform Commonwealth Fund think tank, which supports the Obama "Building Blocks" approach, with both individual and employer mandates and a moderately strong public option (essentially the same as Jacob Hacker, HCAN, Campaign for America, Edwards and Clinton from the campaign, etc). Their partner in analysis is the industry gold-standard Lewin Group (which is actually owned by United Health and so if biased, certainly is biased against single payer as well as strong public option.

Key to the tables and charts below:

  1. Building Blocks = the mainstream Democratic Party Consensus
  2. Stark = Single Payer
  3. Wyden = Wyden-Bennett plan emphasizing eliminating employer health tax deduction.
  4. The others can be pretty much ignored, as you will see.

Here is overall summary.

Summary of Proposals

Number of the Uninsured Who Would Become Newly Covered:

Looking first at how many of the currently uninsured will become covered?

Out of the estimated total number of 48.9 million, only the Stark Plan, like the Conyers HR-676 plan, would automatically assure that everybody is covered.

Commonwealth/Lewin finds that the Wyden and Building Blocks (including Obama and Baucus to lesser extents) come relatively close but don’t actually acheive universal coverage.

The other plans, including all the ones from Republicans do not come close and mostly don’t really even try.

Number of the Uninsured Who Would Become Newly Covered

So, what about costs?

Change in Spending Just of the Federal Government:

The graph below shows just the direct costs to the Federal government, not the total cost.

In other words, not the additional costs by individual and families such as premiums, deductibles co-pays, out-of-pocket due to refusals of insurance company to pay. It does not include additional costs by employers. It does not include the additional costs by state or local government.

Change in Spending just of the Federal Government

The above is what those inside the beltway will mostly try to report on!

Not surprisingly, the Wyden Plan, which like the McCain plan from the campaign, takes away the tax corporate deduction for providing insurance and does little to offer pay directly for coverage, saves the Federal Government the most. While the proposals from Stark, Enzi, Burr and the Building Blocks plan cost the Federal Government the most.

When the Congressional Budget Office comes out with favorable analyses of the Wyden plan, this is what they mean. But as we shall see, this is a very incomplete and essentially dishonest view.

Total Change in National Expenditures on Health Care:

This table shows the change in total costs, the total national expenditure on health care. This is the one that corresponds with Percent of GNP spent on health care, that infamous statistic that shows that U.S. spends twice as much as other developed industrialized nations, but is the only one not covering everybody and the only one bankrupting families if they get sick… and the only one dependent on for-profit private insurance companies.

Total Change in National Expenditures on Health Care

Notice the complete turn-around compared to the JUST federal government view in the prior table. While the Wyden plan saves the Federal Government money, it actually increases total costs and dumps those cost onto others.

Indeed most of the other plans… Enzi, Baldwin, Burr and alas even Building Blocks (including Obama and Baucus) amount to huge giveaways and supports for the private for-profit insurance companies.

Only the Stark Plan (like Conyers HR-676) actually saves money for the overall system, the country as a whole. Only Single-Payer like plans can actually control overall total costs. And this from an organization that does not support single payer, and supports Obama/Baucus/Building Blocks.

Who Pays by Stakeholder Under the Different Plans:

This is the real story, typically ignored by proponents of the other plans including the Wyden plan, the various variations of mandate plans (Obama, Baucus, Clinton, Edwards, Building Blocks, etc.) and the Republican proposals.

Who Pays by Stakeholder Under the Different Plans

The Building Blocks plan, like the Obama and Baucus plan, would increase costs overall, and to the federal government and for employers. The Wyden plan dumps even heavier on employers.

Regardless of what the CBO or GAO or beltway mainstream may say, being "revenue neutral" and saving the Federal government money is not the most important goal of health care reform.

We do need to control costs, but it is overall total costs that are what really count.

And, we also need to provide coverage that is truly Universal for all people, Comprehensive in covering all health needs, and does not bankrupt you if you get sick.

What that table is showing is that all those other proposals — not only those of Republicans Enzi, Baldwin and Burr, but alas even Building Blocks (aka: Obama and Baucus) and Wyden’s — amount to huge giveaways and bailouts for the private insurance companies. The mainstream Democrat "Building Blocks" plan increases costs overall, and to the federal government and for employers. So when they talk about cost control they know they are lying. Indeed, while the bipartisan Wyden plan saves the Federal Government money, it actually increases total costs even more and dumps those cost onto everybody else: states, employers, families and individuals. So when somebody talks about the CBO analysis showing a plan is somehow good (revenue neutral or saving the Federal government money), ask them if they know how it effects total costs and who pays more instead. They are all being at best completely disingenuous. Or just lying.

By the way, such analyses were done back in the early 1990s, including for single payer even though it too was off the table back then. And they have also been done for various State reforms proposals through recent years. You can find them here (click and scroll down).

Now that the various plans are getting more specific, the CBO and/or GAO and/or OMB could do such an analyses:

"There must be a complete, honest, side-by-side comparison of all proposals, including HR-676, by the Congressional Budget Office.

The side-by-side comparison should include projected costs to state governments, employers and to households of different income levels. For 2010 and beyond."

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