Obamacare: the cost-saver that ate the budget
One of the things I’ve learned working programs with hundreds of M’s and even a few B’s (back in the day, those were big numbers) is that the ability to estimate costs, whether from the government or from industry, is absolutely terrible. Everything costs more than imagined and takes longer than envisioned.
Don’t believe me? Consider the results of the Administration’s stimulus, green energy initiatives, GM and Chrysler takeovers, et al.
Part of the problem is you have to start somewhere. Estimates tend to be worse when they’re from the government, who usually depends on industry—who may have an self-interest issue at work—for their costs estimates. The longer the estimate and the more complex the program, the more incorrect the numbers will be.
Still don’t believe me? Have a house built, or better yet, come up with an estimate today to have that house built in 2022. It may turn out you’ve neglected to account for things like, for example, all the $50 light bulbs (and that’s in 2012 dollars) the house requires.
So when a headline says Obamacare has doubled its CBO estimate, the question becomes what’s changed? Or what if the real cost has more than doubled? It all depends on whose numbers you’re going to use:
“The full accounting of the bill is $2.6 trillion. That’s a fair and accurate analysis of what the bill would cost, according to CBO,” [Senator Jeff] Sessions [R-AL] said, noting how the cost dwarfs the fight over the 10-year debt reduction plan debated last year.
With that in mind, here’s an interesting bit of opinion from Jonathan Cohn writing at The New Republic (emphasis added) who regarding Obamacare, attempts to tell us nothing to see here…move along:
Meanwhile, the bottom line about Obamacare really hasn’t changed. Notwithstanding these latest adjustments, CBO still thinks it will mean about 30 million additional people get insurance, that insurance will become more secure for those who have it, that the law will more than pay for itself in the first ten years, and that, over the long run, the law will reduce the deficit.
Based on history, Cohn’s assertion is absurd on its face. Health care alchemy will be unable to add 30 million to the government health care rolls while somehow managing to reduce the deficit. New government programs don’t pay for themselves (Area 51’s perpetual machine excluded).
What does pay for itself? The right innovation and productivity enhancements.
In the case of the nation’s health care costs, what can be done? Increase the health care supply (doctors, PAs, med-techs, technologies, etc.) relative to demand and tort reform come to mind.
Is there a government program that’s ever paid for itself? And if so, how did such a thing happen?
In government speak, programs that come closest to paying for themselves—and they still don’t—are called cost avoidance, which upon examination, still add costs.