Wall Street Weekly | 06/19/2009 12:15 pm

Obamacare Gets Poor Diagnosis From CBO, by Liz Peek

By Liz Peek

Bears, Bulls, Chickens and Pigs: wOw’s Wall Street Weekly with Liz Peek (Week of 6/15)

Editor’s Note: Liz Peek is a financial columnist and the author of wOw’s SHEconomics.

Here’s a shocker: According to a Rasmussen poll conducted last week, Americans now trust Republicans more than Democrats to manage the economy. Considering that the GOP brought the country to the brink of financial collapse just a few months ago, I would call that an amazing turnaround.

Americans are justifiably concerned about the looming budget deficits brought on by the government’s (needed) stimulus spending. They are more perturbed, I imagine, by the prospect that the myriad proposals streaming from President Obama are going to make those deficits permanent. Perhaps the biggest element of uncertainty is the effort to overhaul our healthcare system.

I don’t know about you, but I don’t fully understand the health-care proposals working their way through Congress. President Obama has spoken of the need to cut medical expenses, but for the life of me I can’t connect that ambition with the bills currently under construction. Since this is proposed legislation that will impact one sixth of our economy, and every single American, I am amazed at how vague the discussions have been. Amazed, that is, until I read the reports coming out of the nonpartisan Congressional Budget Office.

Earlier this week the CBO sent a letter to Sen. Kennedy’s committee indicating that their proposals would jack up the federal deficit by an estimated $1.0 trillion between 2010 and 2019, and would extend coverage to roughly 16 million people, leaving an estimated 37 million people uninsured by 2019, instead of 54 million.

Say what? In other words, we are going to disrupt the 150 million nonelderly Americans that are now covered by insurance programs to add just 16 million more? At a cost of $1 trillion?

The CBO also sent a letter about the health-care proposals to Kent Conrad, Chairman of the House Budget Committee. It throws the whole notion of large-scale health-care savings into question. For instance, note that the government today directs almost 60% of our country’s spending on health care. This includes Medicare, Medicaid, veteran’s health programs and so on. These outlays will total more than $1 trillion this year alone. Will it surprise you to hear that these costs are basically out of control? Federal outlays, according to the CBO, have increased from 1% of GDP in 1970 to 5% in 2009; they are projected to exceed 6% in 2019.

I ask you – since the feds have done such a miserable job reining in government outlays for health care, do we really want to hand over the rest of the country’s programs to them? Heaven help us! Maybe the government should get its own house in order before tackling the private sector. The CBO notes that any step-up in insurance coverage would “represent a permanent increase of roughly 10% in the federal” expenditure level.

Here’s one concern, which may well be misplaced. As a safe, competent and maybe lucky driver for many years, I object to “no-fault” auto insurance. I don’t like subsidizing reckless speed demons. Similarly, as someone who works out and consumes far less ice cream than I would choose, I dislike the idea that I will be subsidizing the health-insurance costs of someone who doesn’t exercise, who eats terribly, who smokes and who doesn’t get regular checkups. In short, why don’t we require Americans to take some responsibility for their health? People tend to be economic animals; if there were incentives for people to adopt healthy practices, would not at least some respond?

432 Reader Comments (so far…) Sign In or Register to comment

"I don’t know about you, but I don’t fully understand the health-care proposals working their way through Congress."

Precisely. Yet there are many "experts" who seem to know exactly what is happening with health care . The number " 47" is most popular.. the number of uninsured, and even that is questionable because most of that number appears to be the underinsured.

What we do know is that thousands of families are going under because their health insurers do not perform well. There is some insane myth that somewhow our current system is more virtuous than any alternatives being discussed by federal policymakers. Since Hillary’s failed plan in the 90’s, private insurers have been allowed to line their pockets with billions while strangling patients with noncare, unnecessary care, higher co pays, denying benefits, and inscrutible bills from hospitals and laboratories. And this is the plan we want to keep? Can someone explain what is desirable about that? There has to be a better and saner way.

We have a sick and getting sicker situation, and while I don’t expect a perfect reform , it is past time that we stop this past madness. Today a group of researchers representing forums from 40 states is in the Senate and presenting citizen concerns from town hall meetings. The more people who have input, the better.

By Maggie W on 06/19/2009 1:18 pm

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I agree with you, Maggie. The present system is not adequate and leaves a lot of people out. If they have to pay out of pocket b/c no insurance, they could be financially ruined. Even those of us who do have health insurance still sometimes have outrageous co-pays. Something has to be done so we don’t continue to look like a nation who only provides health care to some, but is willing to let others fall to the wayside. And by the way, why do you think Ms Peek is calling the President “Obamaca”? Is that another way to show disrespect?

By Murphy Mac on 06/19/2009 1:40 pm

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Hey… murphy mac….haven’t seen you in awhile….I think showing disrespect works both ways here on Wow….I have seen the same happening on the articles that lean more left showing it too…..I think maybe all articles by Wow should do an editorial but leave the sarcasm to the posters….jmho.

By Libra Lady on 06/19/2009 2:38 pm

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And by the way, why do you think Ms Peek is calling the President “Obamaca”? Is that another way to show disrespect?

I probably looked right over it, but I’m not seeing the part where she calls him "Obamaca". I do see that she calls his plan "Obamacare", though. I don’t know, that doesn’t sound terribly disrespectful to me. I think all presidents get their share of this sort of thing. No worse than "Reaganomics". Or, if she did call him "Obamaca" it’s no worse than calling Bill and Hillary Clinton "Billary", or George W. Bush "Dubya". It goes with the territory. They probably, for the most part, let that sort of thing roll off their backs.

By Deena B. on 06/21/2009 9:15 am

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You could be right.

By Murphy Mac on 06/21/2009 9:23 am

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I agree, Deena, it is just the current vernacular to describe this new administration. It goes with the territory is correct. It happens to all administrations and I do not think it is, in any way, disrespectful.

By deber B on 06/22/2009 5:52 am

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Murphy

The press coined the phrase "Obamacare" over the last couple of weeks. Maybe that is where she gets it from. Didn’t they use "Hillary Care" back in the 90’s? I don’t know about you, but I do believe that Pres Obama does care. I don’t always agree with the direction we are moving with the deficit, but I do believe he cares.

By Frannie Em on 06/21/2009 1:27 pm

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Thanks, Frannie, it does help to know this info. Yes, they did (or somebody did) call it HillaryCare. And finally, yes, I do believe Pres. Obama cares. Thanks again for enlightening me.

By Murphy Mac on 06/21/2009 5:27 pm

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Hi Maggie- I agree that there must be a better way. But. I don’t think that moving towards a government-only insurance program is the right way. Seriously- look at the CBO website and read the materials there. It is very discouraging - among other things they conclude that reducing costs is nearly impossible. One item I didn’t mention is the impact of malpractice suits and soaring malpractice insurance- i think that’s one of the places we could make a real change. So many tests and procedures appear only aimed at avoiding litigation. That seems insane to me. I completely agree that the more input the better! Best - Liz

By Liz Peek on 06/19/2009 3:24 pm

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Liz, ……Last Thursday the AP released a list of health care options being considered by the House Ways and Means Committee. There is great alarm on this forum that a health care reform bill is being pushed through hastily. That clearly is not the case, although there is much heated debate in Congressional chambers. The President wants a bill on his desk by August. Will he get it? Probably not. If he does, will he sign? Doubtful. It will probabaly be kicked back to committee several times. Will it then become law. That is up for grabs. His goal is to have something in place his first year. Will we all get a perfect plan? No. There will be fire and ice.

Medicare came on board in 1963. Amendments to that program have been ongoing over the decades. Although it appears it will be in a sink hole by 2037, there are millions of people who have benefited from that program. There is no reason to believe that a new health care plan cannot do the same. But this ongoing panic based on rumors is only frightening people, and that is so very unnecessary in times that are already troubling enough. A well known journalist has suggested that smokers with heart disease will not be able to get treatment and that obese people will be denied hip and knee replacements. Our media often run rampant with nonsense that only serves to frightening Americans.

You are spot on about malpractice, and that is just one tip of the iceberg.

By Maggie W on 06/19/2009 4:00 pm

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Liz,

The discussion of ObamaCare is premature. Before a good system can become a project, one has to closely scrutinize all the inherent pitfalls and problematics that might cause a collapse of a new system. For example: illegal aliens who currently derive healthcare benefits. My feeling, hard as it is, definitely is for ridding all illegal aliens and killing the anchor baby rule from this day forward. We must control to some degree our population.

The Wall Street and Main Street changes since January haven’t exactly impressed me. How can I possibly be for ObamaCare if I’m not convinced those in charge know what they’re doing?

Malpractice insurance is astronomical. So much so that becoming a physician is no long an American dream. The field of medicine is rapidly becoming one of those jobs we need foreigners for because Americans won’t do them.

And more than anything else, I believe that the USG is not accountable for some of the shoddy programs that are in place. What happened to oversight?

Indeed, talk about revised healthcare in the US is premature.

By Andrea Brandon on 06/19/2009 10:28 pm

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Andrea, thanks for a succinct expression of thoughts on this volatile subject. I agree whole heartedly with the points you have made. Overall, the ‘jury’ is still out as to whether this administrationis brilliant or totally incompetent in dealing with the complex issues that face us. At this juncture we have no of proof of either end result and we can only pray it is brilliance rather than incompetence that will result from these somewhat hurried actions.

By Sharon R. on 06/20/2009 11:46 am

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True, but I’m not holding my breath, Sharon.

By Andrea Brandon on 06/20/2009 1:29 pm

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Funny, those who are so convinced that illegal aliens are causing the problem never think about the fact that illegals are also paying social security and medicare taxes, and they won’t be able to collect social security benefits ever. That money stays in the social security fund.

By Rita@ Goldivas on 06/22/2009 9:41 am