Tag Archives: Congressional Budget Office

Congressional Budget Office shows it’s just as good at creating fake news as any media outlet

The latest analysis of the CBO’s scoring of the GOP’s repeal efforts is shocking, but it really shouldn’t be. The media is constantly telling us that the Congressional Budget Office is an unbiased, and nonpartisan entity that does their very best to accurately score the legislation coming out of Congress. Here’s the problem with that statement… it’s wrong. The CBO has proven time and again to be biased towards big government initiatives, and hardly ever “accurate” on its estimates. Now, one of the foremost healthcare and economic experts, Avik Roy, is unmasking the CBO for what they truly are – a hack organization that doesn’t care at all about accuracy or truth.

Roy is a right-leaning economist and thinker but he recently decided to dig into the CBO projections because he noticed something startling about the projections of every GOP healthcare plan – they all showed expectations of more than 20 million people “losing” their healthcare. It didn’t matter how conservative or how moderate the plan, no matter what the GOP suggested, the CBO kept saying that more than 20 million people would lose their healthcare. Roy wondered how this was possible give the wildly different plans being suggested by various legislators. So, Roy dug into the numbers and realized almost immediately that the CBO was playing a corrupt and very misleading game with their projections:

In the national debate over the GOP health reform proposals, one data point has stood out above all others: the estimate, from the Congressional Budget Office, that more than 20 million people would “lose” coverage as a result. And there’s been an odd consistency to the CBO’s projections. Do you want to repeal every word of Obamacare and replace it with nothing? The CBO says 22 million fewer people would have health insurance. Do you prefer replacing Obamacare with a system of flat tax credits, in which you get the same amount of assistance regardless of your financial need? The CBO says 23 million fewer people would have health insurance. Do you prefer replacing Obamacare with means-tested tax credits, like the Senate bill does, in which the majority of the assistance is directed to those near or below the poverty line? The CBO says 22 million fewer people would have health insurance. 22 million, 23 million, 22 million — these numbers are remarkably similar even though the three policies described above are significantly different. Why is that?

A congressional staffer kindly leaked the CBO’s scoring process to Roy, and what he learned was that nearly 75% of the difference in coverage between Obamacare and any of the GOP bills has to do with the repeal of the “individual mandate.” Yes, almost all of the difference is just because the GOP would stop forcing people to buy healthcare, and the people would CHOOSE to stop getting healthcare insurance.

Repeal Obamacare

It gets worse.  Almost all of the rest of the difference between the GOP’s suggested bills and Obamacare only exists because the CBO is using faulty numbers.

Based on those estimates, of the 22 million fewer people who will have health insurance in 2026 under the Senate bill, 16 million will voluntarily drop out of the market because they will no longer face a financial penalty for doing so: 73 percent of the total.  Two factors — repealing Obamacare’s individual mandate and the CBO’s outdated March 2016 baseline — explain nearly all of the CBO-scored coverage difference between GOP bills and Obamacare.

The GOP keeps suggesting new plans with hopes that the CBO will give them a better score, but as Roy’s explanation proves, there is no plan that the GOP could propose that would give them a fair scoring. The CBO score has been the primary reason that GOP moderates have given to explain why they continue to fight against repeal, but again, Roy’s breakdown proves that their excuse is spurious. The moderates have to choose: Will they continue to be cowed by the fake numbers from the CBO, will they continue to break the very promises they made to get elected, or will they finally stand up and do what they promised to do, which is repeal Obamacare?

In a follow up piece over at Forbes, Roy suggests a simple solution for the GOP to prove that the CBO’s projections are all washed up:

There’s a simple way for Republicans to highlight the CBO’s mandate mania: have CBO score one version of the bill with an individual mandate, and one version without. It’ll make as plain as day what those of us who follow this stuff see up close: that the mandate is the secret sauce driving the CBO’s faulty coverage predictions.

By the way, the media continues to report that repeal is unpopular, but you shouldn’t believe that lie either. The most recent CNN poll revealed that most Americans want Obamacare repealed.

 

[From an article published by CONSTITUTION.COM]

 

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As always, posted for your edification and enlightenment by

NORM ‘n’ AL, Minneapolis
normal@usa1usa.com
612.239.0970

 

 

 

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It’s about to get a lot harder to find a good doctor…

Finding a good doctor is going to get a lot harder...

Medicare is contributing to a potential shortage of 90,000 doctors by 2025.

Two Medicare issues, if left unresolved, would limit the future supply of doctors and reduce the ability to find a doctor during retirement: Physician payments under the Sustainable Growth Rate (SGR) and financing of Graduate Medical Education (GME).

Medicare is the main source of health insurance for those 65 and older and Congress is focused on preventing an automatic 21% cut in Medicare physician payments due to occur March 31. The Sustainable Growth Rate, or SGR, was established in the 1997 Balanced Budget Act to curtail the rise in health-care costs by linking physician payments under Medicare to an arbitrary target of economic growth.

Under SGR, doctors received annual pay increases until 2002, at which point Medicare spending started to outpace economic growth. As a result, doctors were set to receive a 4.8 % payment cut. Not surprisingly, doctors successfully lobbied Congress for a change. Ever since, Congress has routinely passed a “doc fix” that puts off the scheduled cuts. Just like the movie Groundhog Day, if Congress fails to permanently fix the SGR, it will have to vote year after year on this contentious issue.

These “fixes” have done nothing to solve the underlying problem and have only deferred and compounded the necessary cuts, resulting in more costly fixes each year. The Congressional Budget Office (CBO) estimates that a 10-year fix would cost between $137 billion and $175 billion, while the Committee for a Responsible Federal Budget estimates a permanent fix would cost up to $215 billion over 10 years.

A 21% cut in doctor payments would have a significant impact on physicians’ willingness to see Medicare patients and limit the ability of many retirees to see a doctor. Further, legislating temporary SGR “fixes” year after year only creates uncertainty among physicians and leads to further erosion of faith in our political system and the government’s ability to deal with health care reform issues efficiently and effectively.

Adding to the problem, and yet less noticed, is how the financing of graduate medical education is restricting the supply of doctors. This will be a surprise to many readers — Medicare funds GME and residency programs. To be a licensed physician, a person must attend medical school and then pass board certification (both at great expense). What a lot of people outside the field of medicine don’t realize is that to be a licensed physician, a doctor must also complete additional graduate medical education in a residency program. Finding a proper “match” for a residency relies in part on an algorithm that appears more complicated than astrophysics.

A Wall Street Journal article addressed the problem of a residency program shortage back in 2013, but the financing problem has only increased since. According to the Institute of Medicine, taxpayers provide $15 billion in GME support; Medicare provides $9.7 billion, Medicaid $3.9 billion, and the Veterans Health Administration an additional $1.4 billion. These funding levels have essentially been capped since 1997.

From a public policy perspective, it is questionable whether the federal government should finance GME, or whether hospitals that benefit from the cheap labor of residents should be picking up the cost of training doctors. Either way, without additional resources to fund residency programs, the nation may end up with a shortage of physicians and limit the availability of retirees to see and choose a doctor.

A properly functioning health-care system requires a sufficient number of doctors to meet demand. Unless we adequately train and compensate physicians, we’ll eventually end up with limited choices and worse health care overall. The sustainable growth rate and financing of graduate medical education serve as a reminder that Medicare has enormous influence on health care delivery in the U.S. The Institute of Medicine report on GME provides options for reform that continues government funding of GME and expands the number of residency programs. Providing market-based ideas for reform, a Heritage Foundation report suggests an increase role for private funding of GME, as well as allocating federal funding directly to the states instead of to teaching hospitals so states can tailor GME to their own regional needs.

Finally, fixing the SGR, and the way we as a nation finance GME, must not distract us from reforming the overall health-care system and curtailing the public cost of providing health care. According to the Congressional Budget Office, federal spending on government health care programs will total $1.87 trillion by 2025, or 31 % of all federal spending and almost 7 % of U.S. gross domestic product (GDP).

Congress will never find the willpower necessary to tackle the larger problems associated with the U.S. health-care system if it first can’t address the urgent need to permanently fix SGR or reform GME.

 

[by Jason J. Fichtner, writing for MARKETWATCH]

 

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As always, posted for your edification and enlightenment by

NORM ‘n’ AL, Minneapolis
normal@usa1usa.com
612.239.0970

 

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US debt “not such a big deal” anymore. What?

Economy’s growth means federal deficit is now a manageable 2.9% of GDP

Shhh! Don’t tell anyone, but over the past couple of years, the U.S.’s debt burden, the big issue that swept Tea Party-led Republicans into control of the House of Representatives in 2010, has quietly improved.

According to the Congressional Budget Office, the federal budget deficit was $506 billion for fiscal 2014, which ended in October. That’s about a third the size of the deficit in 2009, in the depths of the Great Recession.

The deficit also has fallen from more than 10% of GDP in fiscal 2009 to only 2.9% of GDP in fiscal 2014. (See the chart below, courtesy of A. Gary Shilling & Co.) That would put the U.S. below the 3% limit at which the European Union requires member countries to take corrective action. The CBO expects us to stay around that level for the next five years.

Deficit to GDP chart
And although federal debt held by the public should reach 74% of GDP this year — the highest percentage since 1950 — the CBO projects it, too, will remain steady for the rest of the decade.

The big improvement in the federal debt should be a boon to the U.S., which has been a magnet for global capital over the last couple of years.

Still, if we don’t address long-term obligations like Social Security and Medicare, the decade of the 2010s may turn out to be a quiet respite before the retirement of millions of Baby Boomers puts us back in the fiscal soup.

But for now, the improvement is impressive even to economist A. Gary Shilling, one of the few to warn about a housing bubble and impending debt storm long before the financial crisis hit.

“The federal government is recovering faster than the household sector,” he told me, mainly because of the economic rebound.

“You’ve had stronger tax collections, especially in the corporate area,” he explained. “When you’ve had any kind of economic growth, you really have a big jump in tax revenues. Economic growth covers a multitude of sins, and a lack of growth exposes them.”

The other big factor, of course, is that the epic August 2011 debt-ceiling battle between Congressional Republicans and President Obama ultimately led to $1 trillion in cuts in discretionary domestic and defense spending over nearly a decade. The “sequestration” process was legislative sausage making at its ugliest, resulting in a credit rating downgrade and later, a government shutdown. But it did the job: Few other developed countries have been able to cut so much without slowing growth dramatically.

Meanwhile, state and local governments have cut more than 600,000 jobs, which along with higher tax revenues have markedly improved the fiscal condition of even big spending states like New York and California.

Unfortunately, Shilling told me, U.S. households are recovering much more slowly.

Because of the housing and credit bubbles, total household debt (including car loans, credit cards, student loans and home mortgages) doubled from 65% of disposable personal income (DPI) in 1980 to a mind-boggling 130% in 2007. (The chart below was provided by A. Gary Shilling & Co.)

Debt to disposable income chart

Similarly, the savings rate dropped from 12% of DPI to a minuscule 2% in 2005. Who needed to save money when you could refinance your mortgage and spend your home equity?

The savings rate is up to 5%, and total household debt has fallen to 103% of DPI, Shilling said. Usually it takes a decade for consumers to work off the debt they racked up during a boom.

But now, he said, “you’ve been at this process for six years. At this rate, it would take a lot longer than four years to complete. … It’s a long way from where I think it’s going.”

Consumers’ deleveraging and stagnant middle-class incomes have depressed consumer spending for all but the affluent. “You no longer have the consumer spending like a drunken sailor,” said Shilling.

But there’s a silver lining. The weak U.S. consumer recovery, combined with another recession in Japan and near-recession in Europe, has helped subdue inflation here. (Read about falling oil and commodity prices.)

That could take the pressure off the Federal Reserve to raise interest rates soon and may improve the federal debt situation even more.

Why? The CBO is projecting 3% Treasury bill rates by 2017 and a 5% 10-year Treasury note by 2018.

Shilling, however, expects the yield on the 10-year to fall to 1%. (Germany, Japan, and Switzerland’s 10-year notes all yield much less than 1%.) But even if rates stayed around current levels, it would mean billions of dollars in additional budgetary relief over what the CBO projects.

The vastly improved fiscal situation may last only a few years, but it’s a big plus for U.S. markets and the U.S. dollar — and another nail in the coffin for the gold bugs and doom-and-gloomers who can add one more item to the long list of things they got really, really wrong.

[by Howard R. Gold, writing for MARKETWATCH]

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As always, posted for your edification and enlightenment by

NORM ‘n’ AL, Minneapolis
normal@usa1usa.com
612.239.0970

 

 

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