There are two kinds of statistics: the kind you look up and the kind you make up.
The Democrats these days are using the latter when they talk about Paul Ryan's plans for Medicare.
Last week they were describing him as destroying health care for seniors. Their view of Ryan depicted in a new ad showing granny getting wheeled off a cliff.
Now President Obama is attacking Paul Ryan’s Medicare reform, saying it would cost seniors $6,400 a year more for health care.
Here’s the President: “It was estimated that Governor Romney’s running mate, his original plan would force seniors to pay an extra $6,400 a year.”
But as the Wall Street Journal said this morning, uh-huh. The President's claim is based on a Congressional Budget Office estimate of the gap between the cost of health care a decade from now in 2022 and the size of the House Budget's premium support subsidy for a typical 65-year-old in 2022. Premium support is the out of pocket costs a senior might face. But the report is old.
In the meantime, Ryan has re-written his plan. Changed his assumptions. Made the plan more moderate. In a more up-to-date report, the CBO says it doesn't have the capability to estimate the plan.
Estimating the cost is a nearly impossible task because Ryan’s plan would introduce a wild card -- the free market.
Seniors would have the option of choosing private insurers to carry their health coverage. This most certainly would drive costs lower. How do we know? Well that's exactly what happened in Medicare Advantage -- the drug plan that President George W. Bush put in place. Costs dropped.
I can't say I’m surprised at the shoddy analysis though. It's all happened before.
When Obamacare was being crafted, proponents said Medicare should benefit -- that costs should drop from productivity gains in the health care industry that would naturally happen over time.
But the Centers for Medicare and Medicaid Services recently said uh-huh. Because health care costs are dominated by labor costs -- specialists, doctors and nurses -- it's hard to get the kinds of productivity gains that you get, say on the shop room floor. Go back to Econ101, gentlemen. It's all right there.
According to a CMS report: "Hospital productivity has increased in recent years by 0.4 percent per year…and by negligible levels, on average, over longer periods."
This is just a small example of the kind of magical thinking that occurs in Washington where people are focused on bureaucratic solutions but have no experience with the private sector.
Oh, by the way, CMS also projects that by 2016 Obamacare will result in 15% of all health care institutions -- hospitals, nursing facilities and the like -- becoming unprofitable.
By 2030, that proportion reaches 25% and by 2050 it hits 40%.
And those, my friends, are the kinds of statistics you look up, not the ones you make up.
The Willis Report with Gerri Willis investigates the top business stories, outs corporate scams and polices D.C. policy.