Cato Institute Estimates Obamacare Will Cost $6 Trillion

Senate Health Care Bill debates start today. The word is that the Dems have not agreed on a bill and are at odds with each other on several issues.  To me, this means nothing.  They will agree on "something", even if it's the wrong thing, because to do "nothing" would mean disappointing Prez BO.

Washington (CNN) -- With Republican opposition unanimous so far, the Senate debate starting Monday on a comprehensive health care bill will focus on bridging differences among the majority Democrats.

Senate Majority Leader Harry Reid of Nevada managed to hold together his 60-seat Democratic caucus to overcome a Republican filibuster and launch debate on the $849 billion Democratic proposal that would expand health coverage to 31 million more Americans. Reid also will need 60 votes to eventually close the debate, expected to last several weeks, and his ability to secure that support remains uncertain.  Read more...

And as the Senators debate the bill, the Cato Institute has run the numbers. Their calculations put the price tag for Obamacare at 6 Trillion dollars. I kid you not.

CATO: Obamacare Price Tag is 6 Trillion

by Ed Morrissey

The advocates of ObamaCare argue that the overhaul of the American health-care system will cost “only” a trillion dollars in its first decade.  Michael Cannon at the libertarian think tank Cato says that Congress relies on significant budgetary gimmicks to get to that number, and that the true cost of ObamaCare in its first real decade is six times that amount:

One gimmick makes the new entitlement spending appear smaller by not opening the spigot until late in the official 10-year budget window (2010–2019).  Correcting for that gimmick in the Senate version, Sen. Judd Gregg (R-NH) estimates, “When all this new spending occurs” — i.e., from 2014 through 2023 — “this bill will cost $2.5 trillion over that ten-year period.”

Another gimmick pushes much of the legislation’s costs off the federal budget and onto the private sector by requiring individuals and employers to purchase health insurance.  When the bills force somebody to pay $10,000 to the government, the Congressional Budget Office treats that as a tax.  When the government then hands that $10,000 to private insurers, the CBO counts that as government spending.  But when the bills achieve the exact same outcome by forcing somebody to pay $10,000 directly to a private insurance company, it appears nowhere in the official CBO cost estimates — neither as federal revenues nor federal spending.  That’s a sharp departure from how the CBO treated similar mandates in the Clinton health plan.  And it hides maybe 60 percent of the legislation’s total costs.  When I correct for that gimmick, it brings total costs to roughly $2.5 trillion (i.e., $1 trillion/0.4). …

Then we correct for both gimmicks, counting both on- and off-budget costs over the first 10 years of implementation, the total cost of ObamaCare reaches — I’m so sorry about this — $6.25 trillion.  That’s not a precise estimate.  It’s just far closer to the truth than President Obama and congressional Democrats want the debate to be.

Consider these unfunded mandates.  The states will have plenty of those under ObamaCare, with the expansion of Medicaid eligibility.  Cannon is right about the unfunded mandates on employers and individuals being part of the cost of the program.  Thus far, no one has really pointed out that costs in this plan are not limited to federal expenditures, but also to the extra costs everyone will pay — for a reform that purports to “bend the cost curve” downward.

Perhaps Senator Gregg can ask the CBO to study that question further in its next analysis.