As bad as it is, the current recession would have been worse without the stimulus package, according to a recent report by the nonpartisan U.S. Congressional Budget Office (CBO).

The American Recovery and Reinvestment Act created or preserved between 600,000 and 1.6 million jobs so far, the report said. It also has increased economic activity, as measured by the Gross Domestic Product, by between 1.2 and 3.2 percent. It lowered unemployment by between 0.3 and 0.9 percentage points.

These November estimates represent a slight improvement from CBO’s March projections. (They are consistent with private sector economists. Mark Zandi, chief economist and co-founder of Moody’s Economy.com, estimated the country would have approximately 1 million fewer jobs without the stimulus. See here, page 5.)

The Center on Budget and Policy Priorities released a summary of the CBO report. It said the most effective provisions for saving and creating jobs were direct purchases of goods and services by the federal government, aid to states (such as picking up a larger share of Medicaid costs), and transfer payments to individuals (such as increased food stamp support or extended unemployment eligibility).

“CBO’s estimates indicate that tax cuts are less effective job producers, and tax cuts for higher-income people and corporations  have very low bang for the buck,” the Center on Budget and Policy Priorities reported.

-Scott Russell

Commenter Ovi, in response to my inquiry into options other than Universal Healthcare, provided this newly released video from Reason.

I’ll dissect it step by step.

The opening statement itself is misleading because it states that the system of insurance itself is the reason that most people don’t shop for price when it comes to health care, but other insurance industries however are incredibly competitive so the statement doesn’t make much sense. The real issue isn’t an insurance system, because the premiums of insurance are directly related to the cost of what the insurance covers, the real issue is that something like 90% of those insured by private health care get their health care through their employer and because of this have lost the sense of personal cost.

The comparison to the fall of non-advancing or stale services or products  like jeans and foodto health care is a poor comparison. As time goes by the cost of old medical technologies (that haven’t been surpassed by new technologies) has gone down, its the creation of newer and often less helpful medical interventions combined with a philosophy that health care should be distributed without pecuniary thought that have driven up medical costs. If health care was a stale industry or one like the utility industry, for example electricity that only adapts to cheaper alternatives, we wouldn’t have rising health care costs. People aren’t willing to pay whatever it takes to buy an apple or a pair of jeans but they are when it comes to medical procedures so the industry adopts new practices to support this and costs go up.

The statement “in 5/6th of the economy individual choice and competition works” is also misleading because it implies that other than health care the rest of the economy runs free of regulation and restriction which simply isn’t true. The electricity industry, which it uses as an example of a correctly functioning free market immediately before this statement, is often horribly limited in choice and competition and is one of the nations most heavily regulated industries.

The main problem I have with the Lasik example is that Lasik isn’t a life expectancy extending medical procedure (which is largely why it isn’t covered by medical insurance, the same way vision insurance is usually separate) and so it isn’t bound by the perspective problems that infect those that are. It is much easier to measure the convenience of no contacts/no glasses in dollar value than it is years of one’s life. Also medical technologies other than Lasik, including life extending ones, get cheaper and better as underlying technology (like lasers for Lasik) get cheaper and better. The implication in the video is that this isn’t true.

I don’t know enough about the Mass. health care system to make any reasonable comments about it, but this point only argues against the current health care proposals (if they do indeed mirror the Mass. system) and not against other functioning, cheaper, equally or more effective systems of universal healthcare.

Okay, now that we’ve hit the boiler plate intro stuff, it’s time to get into the 3 step plan.

The employer based system is a large concern and a clear problem with our health care system, but for better or worse it’s what we have. It’s often said that politics is the art of the possible, and in this case neither side of the aisle has much interest in removing it due to the pressures of the labor unions and companies that have spent tremendous effort creating and arguing for improved health insurance packages. Also a direct and forced removal of the employer based system would see a large premium increase for those 90% of people who have insurance through this system because their collective bargaining power would be removed (which provides them the cheaper and thus more comprehensive plans) and so there’s no constituent pressure to remove it either.

Who is this practicing physician that talks about going to the doctor to get blood pressure management (which can have drastic effects on life expectancy) advice and for information about resolving ingrown toenails (which can be  incredibly painful and debilitating) as wasted dollars? Certainly this information can be provided in cheaper ways (through things like simple science-based medical information websites for example) but that information is medically relevant and should be provided. It’s also important to be able to go to doctors for this kind of information because self diagnosis can be  a terribly dangerous thing to do. The thing is that a diagnostic doctors visit will inevitably be priced on the value of that doctor’s time and it doesn’t matter if you’re getting your potentially cancerous lump diagnosed or your toenail looked at the price will be the same.

I guess the real point here is whether doctor’s visits for these reasons should be covered by insurance or purely out-of-pocket. I’m not sure about the specific regulations on this so I’ll decline to comment on that aspect but in a purely free market I think it’s pretty speculative to state that there wouldn’t be plans that covered these things (especially if there’s enough constituent demand to get regulations on such coverage passed, which I don’t know if there has been).

The “all you can eat buffet” critique of our current system stands in stark contrast to the earlier comment about Mass. rationing health care. What is it guys, do you want rationing or not? And what exactly is better about the free market insurance companies rationing health care as opposed to the government doing so?

Extending the tax exemption to the individual health insurance market seems like a relatively good idea if we don’t fund it on the deficit. We’ll have to find cuts or other taxes to cover this new tax deduction, it won’t be free. I’m unsure of how extending the tax deduction to the individual market without completely removing the job based market provides individual workers with employer provided insurance more options.

The analogy of buying homeowner’s insurance after the fire to buying health insurance with a preexisting condition is relevant only in the case where someone hasn’t lost their previous insurance for some reason beyond their control. Perhaps the regulations forcing insurance to accept people with preexisting conditions is too broad and should be narrowed to only those who’ve lost their insurance because their previous insurance was forcibly severed either by the insurance company or because that individual lost their employer provided insurance, etc. Also if those who develop a condition while under insurance can’t freely change insurance because no insurer will pick them up now, how will the free market pressures operate? High risk individuals will have to stay with their current plans while low-risk individuals can move to cheaper plans which entirely defeats the point of insurance. Those who get sick will be punished as their premiums will continue to rise as the non-sick move to cheaper plans.

The troubles of mandated coverage is worded well here. We must be careful of what coverage we mandate that insurance companies provide because we can overstep our bounds. However the example of teetotallers paying for alcohol abuse treatment is flawed for a couple of reasons. First is that alcohol abuse is in large part influenced by environmental factors, including genetics and so saying that those who have had the chance to avoid these factors shouldn’t have to pay for the risk is like saying because my family doesn’t have a high risk of cancer I shouldn’t have to pay for a plan with cancer insurance. This builds a system where those who were born with high risks because of their lineage and their location are forced to pay much higher premiums for their coverage. Second is that it  implies that no mandated coverages should exist, in which case we end up with more instances of people who are uncovered for medical risks that didn’t turn their way and need either financial assistance or will simply burden our economy with bankruptcy when those costs are levied directly against them instead of the insurance pool. Does it overstep my feeling of individual liberty? Yeah, it does. But does it provide a better system of managing risk with lower negative effects on the economy? I think it does. At least we can agree that this point is much more complicated and expansive than the video makes it seem.

There are many ups and downs to allowing interstate health care market, and since this post is already way too long I’ll save those for another day. I’d suggest a little research on the topic though since it’s certainly not as simple as they make it out to be.

My understanding of the relevant studies on Health Savings Accounts is that they have little to no effect on health care costs as a whole because the amount that they’d cover represents an insignificant minority (1-2%) of health care costs. Any benefits would require an overhaul of the health care system that included changes to the availability of cost/quality information (of which there is just about none). I’m in favor of this even without HSAs. HSAs seem like a non-solution to rising health care costs.

Overall I didn’t find these offered solutions very compelling, but I agree with the end that either way what we’re doing now is just the start.  This solution overlaps the one provided provided the GOP in late October (I believe) in that both remove the interstate restrictions, both remove the preexisting conditions restrictions, and both would result in expensive high risk pools. The CBO review of the GOP health care proposal was abysmal with it only extending coverage to 7 million more Americans and reducing the deficit 68 billion where the Dem’s bill extends it to 36 million Americans and reduces the deficit by 104 billion. But hey, at least its free market principled!

The video in large didn’t present any new ideas and so I encourage any interested parties to research the points more and attempt to crush my statements. Or to provide arguments for why my points are otherwise invalid or unimportant.

And sorry for how long this is.

I hereby publicly challenge defenders of the CBO healthcare model to address the following:

a) Produce 2010 and 2016 state-specific non-group rates, before and after reform, so that an apples-to-apples comparison on premiums after reform can be demonstrated against premiums for sale in the marketplace today.

States like Arkansas today have rates 50% of the national averages being modeled by the CBO.  After reform, the regulatory changes will push all states closer to the subsequent national averages.  The maximum geographic variation in the CBO models appears to be 0.8 to 1.2, meaning that after reform, Arkansas will probably have rates equal to 80% of the national average.  That represents a 60% increase in premiums in the state of Arkansas.  This is BEFORE any effect modeled by the CBO with respect to reform’s impact on the national average itself.

b) Provide 2016 non-group premiums divided between the grandfathered and Exchange blocks.  Currently, the CBO is advertising that the national average COMBINATION of policies issued under current rating rules (grandfathering) and future rating rules (Exchange) will only increase by 10-13%.  Obviously, it is likely that the grandfathered plans will only see part of this increase (parts due to taxes and similar provisions), while the Exchange will be subject to higher rates and adverse selection.

c) Provide 2016 subsidies by state, by FPL category.  States like Arkansas, even after reform, may have premiums 33% lower than other states, simply because of cost of care differences.  That means that low-cost states like Arkansas will get fewer subsidy dollars per enrollee than states that have out-of-control costs.

d) Provide justification for the assumption that non-Exchange individual policies will remain steady or grow between 2014 and 2019 under reform.  It will be illegal to sell grandfathered policies.  Why are their models producing sales outside of the Exchange into 2019?  Most policies issued today terminate when you move across state lines; termination of grandfathered products will result from migration, if nothing else.  The concern here is that their Technical Documentation does not seem to allow for the actual features of individual products, namely their lifetime duration and exit provisions.  One concern is that their model may not be incorporating lapse rates within that block, meaning they are understating enrollment in the Exchange, thereby understating the cost of the bill.

None of these challenges should be interpreted as a professional statement that I am ceding that the CBO projections are otherwise reasonable.  Rather, I offer these challenges so that if they are ever taken up, all of us will either see the limitations of their work more clearly, or so that these fairly obvious concerns can be abated.  It is stunning to me that they did not provide greater specificity in response to Evan Bayh’s requests for greater information.

I know. I’m so good, it’s scary. Like macroeconomic scary and shit. Congressional Budgetary Office take me home please:

The Congressional Budget Office late Monday said it estimates that the federal stimulus package sustained between 600,000 and 1.6 million jobs in the third quarter, and raised gross domestic product by 1.2 to 3.2 percentage points higher than it would have been without the program.

That sound you just heard was Glenn Beck’s head exploding.

For all the talk about skyrocketing budget deficits, the massive expansion of government, and the spread of the socialist “disease” it looks the President’s stimulus bill is *gasp* working. When the Wall Street Journal is reporting that democratic economic policies are working, you know the GOP is in trouble. Oh well, so much for Republicans getting their Christmas wish this year. (Clearly they’ve been naughty). I suppose the country will just have to avoid collapse one more day. *sigh* Sadness.

But as Ezra Klein notes, the CBO analysis provides even more oh so interesting information for Democrats:

Leading the list of high-multiplier items is direct spending by the federal government, infrastructure aid to states and localities, other types of aid to states and localities, and transfer payments (think unemployment insurance and food stamps) to individuals. At the bottom of the list are corporate tax cuts, the new homeowner’s tax credit and individual tax cuts.

In other words, the breakdown of the stimulus shows us that the most effective parts of the stimulus were those championed by progressives (government spending, state aid, infrastructure investment) while the least effective were conservative policies democrats included in order to draw bipartisan support (that never showed up).

Government Spending: 1,649
Tax Cuts: 3

Damn it feels good to be a gangster.

Politically Incorrect News for Politically Incorrect Readers

Some things you may or may not have read…

Item #1- It seems Obama loves himself a good summit. It started before he took office and looks like he will have a ton of summits as president.

Item #2- Medicare Part D “Reforms” Will Hurt Seniors. Not to mention how the Democrats cutting $500 billion out of Medicaid will affect services. The CBO is never wrong. Except when they scored Medicare and Medicaid back in the beginning.

Item #3- Black Caucus tells Obama you’ve done too little for African-Americans. I thought the president works for EVERYONE, regardless of color? Note to the Black Caucus, Obama hasn’t done much for any skin tones in America. Maybe you should stop calling your caucus “black” and change it to “Unions” if you want help from Obama. Just a suggestion.

Item #4- Some Democrats admit its a lie. Obama’s claim of “if you like it, you keep it” is not the truth in this health care bill. Well blow me over. Who believes anything Obama, or the Democrats, say?

Item #5- Sarah Palin tells Obama that he should boycott Copenhagen. Does she think Obama will give up the opportunity to travel and apologize for America while the world watches? Obama and his progressive loons need to continue their global warming myth so they can spread the wealth of American taxpayers. ClimateGate, and facts, will not stop moonbats.

So bad news.  I was all ready to get off work and head on home and uncork a doozy of a piece on Eric Cantor’s silly jobs speech he gave at the far right-wing Heritage Foundation this afternoon.  It was exactly the same as his Republican “plan” for fixing the economy and his Republican “plan” for healthcare reform: nothing more than warmed-over GOP talking points which will devastate the country.  In fact these ideas already did devastate the country when George W. Bush tried them.

The bad news is Salon beat me to this critique it in a big way.  In a post titled “Eric Cantor’s magic pony jobs plan,” Andrew Leonard absolutely savages Cantor’s continued lack of ideas.  I could go through the seven “planks” or whatever Cantor put forth in his “no-cost plan” to fix the economy but really, what’s the point?  It’s not a serious plan; it’s just another attempt by the Minority Wimp to get his face on TV and “win the day,” Politico-style.

I’ll let Mr. Leonard take it from here:

To recap: Cut regulations. Freeze spending. Cut taxes. No new taxes. That’s the plan.

[...]

Cantor says the Obama stimulus has failed. Just two days ago, the Congressional Budget Office (which Cantor approvingly referred to a “neutral” in his speech) declared that the stimulus had worked — that it had added 1.2-3.2 points of GDP growth that would otherwise have not occurred and added 600,000 to 1.6 million jobs.

So without the stimulus, judging from the CBO report, one can assume that the economy would still be contracting, and unemployment would be higher than it is now. But in Eric Cantor’s world, with Republicans in control, slashing regulations and freezing spending, we’d be better off. Why not? In a world where “no cost” solutions are possible, anything can happen.

Read the whole thing.  It’s great. If Cantor thought he was making a serious effort to present himself as a candidate to be reckoned with for anything beyond his current spot, he’s sadly mistaken.

The CBO’s 11/30 premium analysis of the Reid healthcare bill estimates a 0% to 3% reduction in premiums per employee for large firms.  This has been interpreted as positively impacting large employers and their employees.  This interpretation is likely false.

A primary driver of this reduction in per-employee premiums is the addition of healthy employees and dependents driven to coverage because of the mandate.  This means that more employees and dependents will participate in the health plan.  Average costs may fall, but total costs will increase.  That will force employers to make budget decisions which, in turn, will likely increase the premium costs to individuals.

My discussion will focus on an illustrative example: a firm with 100 employees, 80 of who take up coverage.  The premium rates charged this groups are $200 per employee per month, and the employer pays 75% or $150.  The employer pays $12,000 per month ($150 * 80 employees).  Each employee pays the remaining $50.

Under reform, let’s assume that all 100 employees participate in the plan, driving the average cost downward by 2%, so the actuarially-fair rate is $196 per employee per month.  The employer continues to pay 75%, which is now $147.  The employer now pays $14,700, a 22.5% increase in their healthcare bill!

One response worth discussing would be if the firm keeps their $12,000 total contribution frozen.  This would translate into $120 per month off of each employee’s premiums.  This would result in the employee premiums increasing from $50 to $76, a whopping 52% increase.

Significant care must be taken to interpret the CBO numbers correctly.  Unfortunately, the CBO paper itself isn’t sufficiently detailed for us to discern the size of the impact I discussed above, nor how they model the employer contributions to health plans.

For the economics geeks out there, if you are still reading, you’ll recognize that the problem here is that the implicit wage reduction funding the healthplan is paid by all employees, yet the benefit is limited to a subset of people who sign up for the plan.  This results in cross-subsidization between workers.  The CBO is telling us that this cross-subsidization may fall after reform, with a resulting dynamic change in the implicit wage reduction.

(Note: they also tell us that the worst risk may bail on the employer healthplan, and go to the exchange.  This may happen for low-paid workers eligible for cost-sharing subsidies.  The fact that this may happen for some employers does not mitigate the fact that the effect I describe above will also happen for some employers.  They also tell us that large groups with better-than-average costs may be grandfathered, leaving the worse-than-average groups to participate in the Exchange-based pooling; somehow this does not impact large group premiums or cause an increase in the pooled rates insurance companies must charge).

“Recipients report that about 640,000 jobs were created or retained with ARRA funding through September 2009. Such reports, however, do not provide a comprehensive estimate of the law’s impact on employment in the United States. That impact may be higher or lower than the reported number for several reasons (in addition to any issues about the quality of the data in the reports). First, it is impossible to determine how many of the reported jobs would have existed in the absence of the stimulus package. [Emphasis added.]” – CBO

Click here to read more

The release of a new book, “If We Can Put a Man on the Moon . . . ,” by Bill Eggers and John O’Leary, helped set the stage for the National Academy of Public Administration’s annual meeting that centered on management issues related to health care reform.

The authors examine big successes undertaken by the government – like the Manhattan Project, the Marshall Plan, the Berlin Airlift, and the moon landing – and draw some lessons about what each took to be successful.  They also contrasted these successes with failures such as Boston’s Big Dig, Iraqi reconstruction efforts, and Hurricane Katrina.

In surveys of senior career executives in the federal government, “60 percent said that government was less capable of executing large projects today than it was thirty years ago,” noted the authors.

The authors declare: “This book is about executing large, important, public initiatives. . . making sound policy choices is critical . . . however, brilliant policies poorly executed will likewise disappoint.” They then look at large government undertakings from a process perspective, identifying six key elements:

• The undertaking must start with a good idea.
• The idea must be given specifics, often in the form of legislation, that become an implementable design.
• The design must win approval, as when a bill becomes law, signaling commitment.
• There must be competent implementation.
• The initiative must generate desired results.
• Over time, the initiative must be subjected to reevaluation.

The authors take on each of these steps, describing potential pitfalls as well practical principles, tools, and techniques to be successful.  They provide entertaining, well-written stories of people and projects, from the efforts of Coast Guard Admiral Thad Allen in the wake of Katrina; to the implementation of the 2003 London traffic congestion charging program by Mayor Ken Livingstone; to the rolling blackouts in the California energy crisis of the late 1990s created by well-meaning but ill-designed state legislation, that led to the recall of Governor Gray Davis.

Their book contains insights and warnings helpful to the ongoing health care reform debate.  For example, they note that poor policy design “occurs because the work of drafting a bill that launches a major initiative isn’t generally treated like the design process it truly is.  Instead of a sound, executable design, the goal of the legislative process is often producing a bill that can pass . . . “  The authors continue, “Fully 45 percent of federal executives say that policy is rarely designed by those with relevant experience.  The dramatic disconnect between policy designers and policy implementers is perhaps the most broken part of the journey to success.” They recommend role playing and scenario planning efforts, like those used by military strategists and the private sector before it launches major initiatives.

They conclude with a warning:  “The tendency to see the enactment of legislation as an end unto itself, to claim credit for a great achievement upon the creation of a new law, is one of the most destructive tende3ncies in democratic governance.”

While Congress leads the legislative and policy design, the executive branch (and the Government Accountability Office) could proactively offer insights on the implementability of the pending legislation.  Eggers and O’Leary offer an ideal(istic) approach, recommending an objective “implementation feasibility assessment” to be done by an independent review board, much like the Congressional Budget Office offers its independent assessment of the cost of legislation.  However, that is not likely to happen any time soon!

One of the fundamental promises of Democrats is that their massive takeover of health care would deliver lower costs, delivering an economy of scale.

The problem is that government has never been very good at lowering the cost of anything.  Quite the contrary.

And what has always been true before turns out to be true again.

Let’s get right to the nitty gritty of the CBO report:

“CBO and JCT estimate that the average premium per person covered (including dependents) for new nongroup policies would be about 10 percent to 13 percent higher in 2016 than the average premium for nongroup coverage in that same year under current law. About half of those enrollees would receive government subsidies that would reduce their costs well below the premiums that would be charged for such policies under current law,” the report says.

Now, Democrats are trying to argue that about the “about half of those enrollees” who would have lower premiums due to receiving government subsidies.  But understand: the costs are objectively higher by 10-13% than they would have been had we done absolutely nothing at all.  The mere fact that some people are getting transfer (i.e., welfare) payments from the government (i.e., from still more government taxing and borrowing) doesn’t in any way change that fact.

Stop and think about it: it would be a lot cheaper for the government to provide people with subsidies based on the lower costs of doing nothing else to mess with the health care system.  It is an outright fraud for Democrats to say they will lower costs.

I like the way Mitch McConnell put it:

“The bottom line is this: After 2,074 pages and trillions more in government spending, massive new taxes and a half-trillion dollars in cuts to Medicare for seniors, most people, according to the Congressional Budget Office, will end up paying more or seeing no significant savings,” Senate Minority Leader Mitch McConnell (R-Ky.) said in a statement. The health insurance industry’s lobbying arms also proclaimed that the report confirmed their similar warnings.

This is just a terrible bill, and a terrible philosophy.

Democrats have done absolutely NOTHING that will reduce the costs of healthcare.  They are diametrically opposed to tort reform, which would lower the costs of premiums by lowering doctors’ exposure to risks, simply because the sharks – I mean lawyers – who sue everything that walks, crawls, swims or flies are a major Democrat special interest group.

In the same way, Democrats talk about “increasing competition,” and yet they are fundamentally opposed to actually doing anything of the sort.  A primary reason healthcare costs have increased so much is due to the fact that insurance companies are specifically forbidden from being allowed to compete across state lines.  Republicans want competition; Democrats do not.  Rather, Democrats want to continue to mandate special interests-based coverage by dictating to insurance companies what coverage they must offer.

The other thing is that Democrats talk about the fraud they are offering is “deficit neutral.”  It is no such thing.  They played budget gimmicks, taxing for four years before having to pay out any benefits.  If you look at the costs of the NEXT ten years – when benefits will actually be paid out for all ten years – the cost will be $2.5 trillion, rather than the $848 billion that the Demcorats talk about in their tax-for-ten-year-spend-for-six plan.

Taxes will be raised by over $500 billion.  Medicare will be cut by $500 billion.  $500 billion is another way of saying half a trillion dollars.  That’s how the Democrats get their “savings”: they bleed it from taxpayers, and they steal it from their previous commitments to senior citizens.

The Democrats’ bill raises taxes, guts Medicare, and raises premiums.  You can start to understand why the Dean of the Harvard School of Medicine gave the bill a failing grade.

Barack Obama is sending 30,000 Americans to Afghanistan and not the 40,000 that General David McCrystal said were required for victory.

Why?

Since being elected, Obama has likely been privy to information that has dispelled some of his childish naivete about the world although certainly not all, far from it.  Obama knows that the US cannot leave Afghanistan.  He also knows that his political base, which shares his naive ideology, does not want the US there.

So what does Obama do?  Instead of making a decision to lead America to victory by acting on the advice of the general he appointed he has decided to do what he was told would lead to an American defeat and in doing so Obama is risking the lives of Americans in Afghanistan and ultimately in America.

Now Obama and the Socialist-Democrats are engaging in the deplorable act of attempting to further politicize the effort in Afghanistan and divide Americans against each other by suggesting that some Americans pay a “war tax” to fund the effort. 

Apparently the socialists believe that there is all of a sudden no money to pay for national defense but there is plenty to go around for entitlement programs like socialist health care.  To put that in perspective, the new effort in Afghanistan is $40B while Obama care is being misrepresented by the Socialist-Democrats 40 times that much (i.e., >$1.5T) but will almost certainly cost closer to $9T over only 6 years.  Furthermore, excluding Obamacare, the CBO has estimated the rest of Obama’s economic policies to add an additional $10T to the US debt which stood at $10T at the time.  Since then Obama has run the US debt to $12T in less than 9 months.

This is the same tactic that the Democrats have been using for years: divide Americans and set them against each other in an imaginary class war that they create through nothing more than their politics.  This is the same strategy that was employed by every socialist leader in the 20th century including Hitler, Stalin and Mao.  With Americans fighting each other the aim is that most will not recognize the real enemy: their own government.

Obama has once again proven himself to be a selfish, ego-centric incompetent idealogue who has no regard for anything or anyone other than what is good for his own political career and advancing the tyranny of his socialist ideaological agenda.

Yesterday, the Congressional Budget Office released its much-anticipated analysis of how the Senate health bill might affect insurance premiums. As a political matter, the analysis appears to be a clear win for proponents of the bill. Most importantly, CBO found that average premiums in the large group market—which provides about 70% of private health insurance—would decline slightly in 2016. That provides comfort to Senate moderates who were concerned by claims that the bill would increase premiums significantly.

On the other hand, the report also found that average premiums in the nongroup market would increase by 10 to 13%. That substantial boost is providing some ammunition to opponents of the bill.

To put these impacts in context, it’s useful to dig a bit deeper to understand the various channels by which health reform may affect insurance premiums. CBO identifies three such channels: changes in the amount of health insurance coverage that each beneficiary purchases, changes in the types of people with coverage, and changes in the price of a given amount of insurance for a given group of enrollees:

For me, the most interesting of CBO’s findings is that the Senate bill would make the nongroup and small group markets more efficient. The price of nongroup coverage would be reduced by 7 to 10% (holding constant the amount of coverage and the type of people covered), while the price of small group coverage would be reduced by 1 to 4%. Where do these savings come from? From reduced administrative costs and competition in the exchanges (not, CBO notes, from any material reduction in cost-shifting from the uninsured to the insured).

The second key finding is the enormous increase in the amount of coverage that consumers would purchase in the nongroup market. CBO finds that the bill would induce people in the in the nongroup market to purchase insurance that covers a larger share of their costs; the bill would also require insurers to cover a broader range of services. Both of these changes would boost nongroup premiums.

The third major finding is that the changing mix of enrollees would lower average premiums in the nongroup market. Premiums in the large group market would decline slightly.

A fourth major implication, overlooked in most discussions thus far, is that we shouldn’t assume that average premiums going up is always bad (or, for that matter, that average premiums going down is always good). Consider, for example, the increase in average nongroup premiums, which occurs because nongroup insurance would expand to cover more services and a larger fraction of beneficiary costs. To what extent is that increase harming people in the nongroup market? It depends on how much the beneficiaries value their new coverage. When consumers move up from a Honda Civic to a Honda Accord, it’s usually safe to assume that they are benefitting, even though the Accord is more expensive. On the other hand, we would look askance (I hope) at a government program that forced potential Civic buyers to purchase Accords instead.

So it is with nongroup insurance. If people are trading up willingly to more expensive coverage, we shouldn’t view that as a bad thing (there is an issue about how broader coverage affects their consumption of health services, but let’s leave that aside for now). On the other hand, if the government is forcing them to buy coverage they don’t fully value, we might be concerned (with the obvious caveat that with health insurance, unlike car purchases, there are some legitimate reasons why the government might mandate some level of coverage). But even then, the most important concern is the net burden (how much consumers value the coverage less what they have to pay for it), not simply the gross burden of paying for it. CBO doesn’t get into these particulars in detail, but it does provide the following breakdown of the amount of coverage effect: two-thirds is due to greater actuarial value of the plans and one-third is due to coverage of more services (including those induced by the greater actuarial value). The increase in actuarial value means that, on average, about two-thirds of the increase in nongroup premiums will be offset by reductions in out-of-pocket spending. As a result, I think the increase in average premiums significantly overstates the burden that beneficiaries in the nongroup market might bear (and, indeed, some may well be better off).

Of course all of these conclusions come with numerous caveats. Most importantly: (a) YMMV; individuals may experience much larger premium increases or decreases than the averages, (b) CBO didn’t model some impacts that could raise premiums — most notably the possibility that increased demand for health services would drive up prices, (c) CBO didn’t model some impacts that may eventually reduce premiums — most notably provisions that might reduce health costs somewhat after 2016, and (d) these findings don’t include the effects of any subsidies or the tax on Cadillac plans; see the CBO report for analysis of those.

The CBO’s new report says  premiums will rise.    True to form, Paul Krugman has  accused Republicans of being stupid,  but as Joseph Lawlor  points out,  Krugman must be either stupid himself or deliberately deceptive.

If memory serves,  this has knocked off the third leg off the stool of Democratic promises.    Logic says this would be the death of this horrible legislation,  but we’re talking Democratic politicians here,   so what we will get is a whole bunch of spin explaining how it will all work in the end because it has been so carefully planned.

But this does give me hope that the Christmas deadline will quickly become part of Harry Reid’s unfulfilled wish list.  What a grand Christmas gift that would be to the American people!

The Politically Incorrect News for the Politically Incorrect Reader

Some things you may or may not have read…

Item #1- Would anyone take advise from an economic adviser who cost Harard $1.8 billion dollars? Obama does. Larry Summers is on Obama’s economic council and was President of Harvard and under his management, the university lost $1.8 billion. Hmm…wonder why the stimulus plan didn’t work?

Item #2- Obama’s hand of friendship continues to get slapped back in his face. Russia is building an arms plant in Venezuela. Obama gave up the missle-shield in Poland and gets Russia arming his pal Hugo Chavez. America got screwed with this weenie-in-chief.

Item #3- Congressional Budget Office bitch slaps Senate health care bill. Reports says Senate health care bill would raise premiums 10 to 13 percent or $2,000 on family policies compared to what the cost otherwise would be if Congress were simply to do nothing.

Item #4- Supreme Court overturns decision on detainee photos. The communist-lefty group ACLU is pissed.

Item #5- Can Progressives read? Obama was supposed to “restore” America’s image but things are not looking to good overseas. Unless you count are allies hating us and our enemies are too. Ever imagine the day you would hear America looks weak and uncertain? That’s what Obama has brought us.

The Politically Incorrect News for the Politically Incorrect Reader

Some items you may or may not have read…

Item #1- Congressional Budget Office report predicts hike in insurance costs. This has been known since day one of the Progressives attempted takeover of health care.

Item #2- Health bill fails to block ILLEGAL immigrants from coverage. I’m shocked. Obama lied again! Reward criminals while punishing the law-abiding U.S. taxpayer.

Item #3- The U.N. will not let leaked “ClimateGate” emails stop their attempt to steal trillions of dollars. Nothing to see here, look the other way!

Item #4- Lawmakers probe “ClimateChange” and Obama’s White House “Science” adviser John Holdren. Seems one of the emails was sent out by Holdren. This is the same progressive who believes in population control through forced sterilization.

Item #5- It’s the Chicago-way. White House to “Name and Shame” Lenders. Who cares about contracts…its just paper meant to be ripped up by the Obama administration.

Whenever carbon market opponents talk about the costs of the system, they like to point that Obama himself admitted that a cap-and-trade would cause electricity bills to increase.  Sarah Palin touts it in her book, and many articles quote it as well.  Interestingly, this statement rings to true to many people who usually call Obama a liar.  So did the President really undermine his own plan?

Well, he did say that, with a certain cap-and-trade proposal, “electricity rates would necessarily skyrocket,” but he wasn’t talking about the one Congress is considering now.  As Media Matters explains,

Obama was talking about a different plan causing energy costs to “skyrocket.” As the Associated Press noted in fact-checking Palin’s book, Obama was not talking about the cap-and-trade legislation that has since passed in the House when he referred to energy costs “necessarily skyrocket[ting].” When Obama made that statement to the San Francisco Chronicle editorial board in January 2008, he was describing a cap-and-trade proposal that would auction off 100 percent of available carbon allowances, and he made no mention at the time of a plan to compensate consumers for potential cost increases. But as PolitiFact.com noted, the Waxman-Markey bill initially would distribute most of the carbon allocations for free and contains substantial provisions to offset costs to consumers, and thus “should reduce costs to consumers.”

There’s still a lot of disagreement about the exact cost of cap-and-trade.  While the system itself would naturally have some cost to consumers at some point, the actual legislation includes measures to lessen the impact.  The often-quoted “postage stamp a day” price comes from a Congressional Budget Office report on the Waxman-Markey bill.  The CBO actually predicted a net yearly savings for low-income families.  There are lower and higher estimates out there, as well.

We do know that “$3,128 per household” claim is false.  It was based on an MIT study, which some House Republicans blatantly misinterpreted (read the full story at PolitiFact).  In general, the most dramatic figures are produced by ignoring the features that save money.  Obviously, if you leave out the cost-cutting measures, you’re going to end up with a higher cost.

This chart was released by the the Senate Republicans to show the real cost of Harry Reid’s Health Care bill and to show the accounting games the Democrats are playing to hide the true cost of their dreams to take over America’s health care. Just think about the Democrats “doc-fix” bill that was passed as a separate bill to trick the taxpayers out of an additional $200 billion.

The Weekly Standard reports:

The Democrats assert that their Senate bill would cost $848 billion over ten years. But Congressional Budget Office projections show that only 1 percent of those costs would kick in prior to the fifth year of what the Democrats are calling the “first 10 years.” In the bill’s true first 10 years (2014 to 2023) — that is, in the first 10 years in which it would be operational to any meaningful extent — the CBO projects that the bill would cost $1.8 trillion.

But it gets even worse. The CBO doesn’t say that the bill’s total costs from 2010 to 2019 (99 percent of which would come from 2014-onward) would be $848 billion — or that its total costs in its real first 10 years (2014 to 2023) would be $1.8 trillion. Rather, it says that these would be the gross costs of the bill’s “expansions in insurance coverage.” The CBO shows that there are many other costs in the bill as well, including spending related to the CLASS Act, risk-adjustment payments, funding for the government-run “public option” (not a cent of which is included in the figure for “expansions in insurance coverage”), and other new federal spending.

People wondered why the Democrats held meetings behind closed, and locked, doors. It’s because this bill is wrought with fraud, bribes and earmarks. It’s the work product of the Democrats…The Party of Pork.