There's been enough budget tricks to avoid puffing out the deficit in the Senate health care bill to stuff a magician's hat full. But one budgetary piece of legerdemain trumps the rest.
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Almost half of the CBO's federal budget "savings" in the Senate health care plan results from establishing a new federal entitlement program ($72 billion of $132 billion over 2010-2019).
We're not talking about the public option here, an idea that could be resurrected still. And we're not talking about the expansion of Medicare to cover more Americans.
Under the new "Community Living Assistance Services and Supports (CLASS) program," active workers could purchase long-term insurance coverage, usually through their employer, notes Fox News senior analyst James Farrell.
Although most individuals would be required to pay premiums, estimated by the government at $240 per month at inception, students and individuals under the federal poverty level would pay only $5 per month, Farrell says. The program would provide a cash benefit of no less than an average of $50 per day, with no lifetime or aggregate limit.
Now, how can establishing a new entitlement program lowerfederal budget costs? Simple: Elected officials say cash flow will take care of costs, says Farrell.
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Really? The CBO already estimates that the costs for this new program will eventually, just like Medicare, Medicaid and Social Security, outstrip its revenues. Medicare alone has unfunded liabilities that would block out the sun, an amount that nearly approximates the GDP of the entire planet.
But because the program is estimated to collect revenues that exceed its costs in the initial years, and because it will not pay any benefits until after five years into the program, presto-change-0, the federal government can show "savings."
Talk about stretching a point until it snaps. Only in DC's land of make-believe accounting do you see this impenetrably delusional bookkeeping. Has your head exploded yet?
How badly will this ticking time bomb injure taxpayers when it eventually explodes? That it is the audacity of hope to think this program won't hurt taxpayers is an understatement. When will Congress begin to pay itself in Treasurys? When will it be forced to eat its own cooking?
This "CLASS" program is of a piece with the Congress's moves to get taxpayers believing that reform "won't add a penny to the deficit," as the President avows, by having the health bill pay for six years of reform with ten years of taxes and fees, more than $400 billion from 18 new taxes and levies.
To get the doctors on board, you've seen, too, that the Congress has shuffled off the "doc fix" into a separate bill, whereby elected officials are actually paying doctors enrolled in Medicare more money, not less, even though by law their Medicare payment rates would have been cut by about 21% in 2010 and then decline further in subsequent years.
You've seen as well the promises from the American Medical Association, that the nation's doctors will deliver whopping cost savings to pay for health reform--promises that would entail corraling the country's 183,000 doctors to do that.
You'd have better luck at shepherding mice through a baseball stadium. Or catching gnats in a hurricane. This is health reform built on spit and a handshake. Health reform paid for with fumes and lilac-scented promises.
When it comes to the new CLASS program, the CBO put out a report that shows how cowed this supposedly nonpartisan group has become.
It notes that "[i]n the decade following 2029" it "would begin to increase budget deficits," adding though "however, the magnitude of the increase would be fairly small compared with the effects of the bill's other provisions."
However, a report by the Center for Medicare and Medicaid Services' [CMS] chief actuary paints a much more dire prediction.
The CMS states that the program will result in a "net Federal cost in the longer term," Farrell notes.
The CMS warns that the program is structured in such a way as to result in a classic "insurance death spiral," because most of the people likely participating will be the $5 per month subsidized individuals with higher claims.
The CMS adds that "there is a very serious risk that the problem of adverse selection would make the CLASS program unsustainable." [Emphasis EMac's].
Sources : 1. CMS December 10, 2009 Memorandum from Richard S. Foster, Chief Actuary, http://src.senate.gov/files/OACTMemorandumonFinancialImpactofPPAA%28HR3590%29%2812-10-09%29.pdf#page=4
2. CBO, Patient Protection and Affordable Care Act, Incorporating the Manager's Amendment, December 19, 2009, http://www.cbo.gov/ftpdocs/108xx/doc10868/12-19-Reid_Letter_Managers.pdf]