How Have Past Government Estimates Worked Out?

The big deal about this health care takeover is that the CBO, using specific assumptions provided by Democrats, came up with a score that told us how much the bill would cost and how much it would save in a ten year period. This is all smoke and mirrors but Democrats dutifully appear in front of constituents and claim the new law will cost what was estimated and will save money. They continue to harp this possibly under the meme that if you say something enough, people will start to believe it.

The reality is that this law will cast more than estimated (two to three times more) and therefore, will not save money. I know that the progressives believe what they are told by government. Strike that, they believe what they are told by progressives/liberals/Democrats in government. If a conservative from government told them they needed oxygen to live they would say it was a lie and that the conservative was a hate monger who was talking about death squads.

Let us take a look at what Jim Quinn of Lew Rockwell.com has to say about past government estimates:

Politicians have demonstrated over decades to be completely ignorant of the long-term impact of the rules and regulations they have inflicted upon the American people. For those who believe that creating a new entitlement for 32 million people, hiring 16,500 new IRS agents to enforce the new regulations, and allowing government boards to make your healthcare decisions for you will reduce costs and improve healthcare, I will point you to the facts versus promise of prior legislation. A Senate Joint Economic Committee released a report in 2009 found that health care plan costs are always dramatically underestimated by the politicians that create the entitlements:

  • Medicare (hospital insurance) – In 1965, as Congress considered legislation to establish a national Medicare program, the House Ways and Means Committee estimated that the hospital insurance portion of the program, Part A, would cost about $9 billion annually by 1990.v Actual Part A spending in 1990 was $67 billion. The actuary who provided the original cost estimates acknowledged in 1994 that, even after conservatively discounting for the unexpectedly high inflation rates of the early ‘70s and other factors, “the actual [Part A] experience was 165% higher than the estimate.”
  • Medicare (entire program) – In 1967, the House Ways and Means Committee predicted that the new Medicare program, launched the previous year, would cost about $12 billion in 1990. Actual Medicare spending in 1990 was $110 billion – off by nearly a factor of 10.
  • Medicaid DSH program – In 1987, Congress estimated that Medicaid’s disproportionate share hospital (DSH) payments – which states use to provide relief to hospitals that serve especially large numbers of Medicaid and uninsured patients – would cost less than $1 billion in 1992. The actual cost that year was a staggering $17 billion. Among other things, federal lawmakers had failed to detect loopholes in the legislation that enabled states to draw significantly more money from the federal treasury than they would otherwise have been entitled to claim under the program’s traditional 50-50 funding scheme.
  • Medicare home care benefit – When Congress debated changes to Medicare’s home care benefit in 1988, the projected 1993 cost of the benefit was $4 billion. The actual 1993 cost was more than twice that amount, $10 billion.
  • Medicare catastrophic coverage benefit – In 1988, Congress added a catastrophic coverage benefit to Medicare, to take effect in 1990. In July 1989, the Congressional Budget Office (CBO) doubled its cost estimate for the program, for the four-year period 1990-1993, from $5.7 billion to $11.8 billion. CBO explained that it had received newer data showing it had significantly under-estimated prescription drug cost growth, and it warned Congress that even this revised estimate might be too low. This was a principal reason Congress repealed the program before it could take effect.
  • SCHIP – In 1997, Congress established the State Children’s Health Insurance Program as a capped grant program to states, and appropriated $40 billion to be doled out to states over 10 years at a rate of roughly $5 billion per year, once implemented. In each year, some states exceeded their allotments, requiring shifts of funds from other states that had not done so. By 2006, unspent reserves from prior years were nearly exhausted. To avert mass disenrollments, Congress decided to appropriate an additional $283 million in FY 2006 and an additional $650 million in FY 2007.

Based on this track record, do you believe President Obama when he declares that his national healthcare plan will save $136 billion in the first ten years? It appears the rocket scientists on the Democratic side of the aisle have trouble estimating the costs of the entitlements they hand out on a regular basis. Republicans, on the other hand, tend to slightly underestimate the cost of their invasions (Rummy says $50 billion; taxi meter says $977 billion and counting).

The entire piece is quite long but is well worth the read. It lays out very nicely what the new entitlement program will cost and how the estimates are nowhere near what will actually occur.

There is no doubt that the government does not get estimates correct. One can blame the CBO but that entity only scores what it is given and it is given only what is needed to get the score desired. It does not matter what party is involved because they both submit only what they want scored and only what will give the desired results.

The government deliberately does this to fool people into supporting the legislation. By the time most of it implodes many of those who lied to us will be out of office or dead. Many of them are wealthy and don’t really care about what the law does because it will not affect them. Even if they subject themselves to the bill they are wealthy enough to pay for what they want and while they are in office they have access to the top floor at Walter Reed where a million dollars a year keeps a ward ready in case some dignitary needs care. This includes members of Congress.

Once they are out of office they will enjoy what their money can buy for them. They will be able to spend their money anywhere in the US they want to get care. The only difference between them and a Canadian politician is that the Canadian needs a passport to get the care here.

And does anyone really think they will get the same care as members of Congress? Ted Kennedy received top-notch care on a moment’s notice. Anyone who thinks that Mac Daddy Obama is going to provide them with the same treatment that Teddy or any other politician gets is smoking some of the good stuff.

Read the article. There is no doubt they deceived us. There is no denying that their previous estimates of programs were lies and did not pan out. There is no doubt that they have been off by many multiples of the original cost on these past programs.

And there is no doubt that this is true for the new law.

Not to worry though. We will just print more money.

Never surrender, never submit.
Big Dog

Gunline

If you enjoy what you read consider signing up to receive email notification of new posts. There are several options in the sidebar and I am sure you can find one that suits you. If you prefer, consider adding this site to your favorite feed reader. If you receive emails and wish to stop them follow the instructions included in the email.



Print This Post

If you enjoy what you read consider signing up to receive email notification of new posts. There are several options in the sidebar and I am sure you can find one that suits you. If you prefer, consider adding this site to your favorite feed reader. If you receive emails and wish to stop them follow the instructions included in the email.

2 Responses to “How Have Past Government Estimates Worked Out?”

  1. To expect an honest estimate from an organization with 1) obvious conflicts of interest and 2) a long history of dissimulation and deceit, which 3) does not have to submit to an independent audit by a disinterested authority, is quite obviously insane. What does that say about those of us who routinely trust such estimates?

    Insanity is often characterized as repeating the same behavior endlessly in the hope that the results will change. That applies all too well to persons who trust governments, bureaucrats, and politicians.

  2. David Wozney says:

    Re: “We will just print more money.

    If the stated value, of “Federal” Reserve notes, declines enough with respect to copper and nickel, the 1946-2009 U.S. Mint nickels, composed of cupronickel alloy, could become somewhat rare in mass circulation.

    The April 13th metal value of these nickels is “$0.0614575” or 122.91% of face value, according to the “United States Circulating Coinage Intrinsic Value Table” available at Coinflation.com.