More From The CBO

[Gaspar]

They better be in a hurry now.  They have to pass this thing before we learn any more.

Congressional Budget Office projections — from 2014 to 2025 Obamacare would provide an average of $83 billion per year in new taxpayer-funded health-care subsidies that would ultimately be paid to health insurers. That's ten times the $8.3 billion in combined annual profits made by America's ten largest health insurers. And, of course, Obamacare would also require that every American buy the health insurers' product under penalty of law.

[Conan71]

Buh...buh...buh....but wait! I thought Obamacare was really going to stick it to those evil insurance companies.  You know those companies who contributed to President Obama and just about every Dem and Rep in Congress who are going to be totally objective on this but try to make voters think this is really about helping them. Ugh!

[Gaspar]

So it takes billions from the people and increases insurance company profits by ten-fold.  I didn't see that coming?  Seriously, I thought the plan would hurt the insurance companies by forcing them to cover more liability.

I suppose you really can't figure in the liability at this point, but at least I now understand why the insurance industry is pushing for this to happen.

[rwarn17588]

Do you have a link to this excerpt?

[Gaspar]

The bill is available for review.  They are not making this public, but one of the house members mentioned the location of the file.  Here it is for all it's worth.  When the CBO gets done with it, it goes to the Rules committee where it's expected to grow significantly.  Because of the procedure they are now using, "Deem & Pass," it will not be reviewed, and agreement on the amendments will be considered "a vote pass" on the bill.  Pelosi has agreed to allow members of the house 1 hour to read the final bill before it's passed.

http://budget.house.gov/doc-library/FY2010/03.15.2010_reconciliation2010.PDF

This is amazing. 

. . .and rwarn, it was a National Review article.  http://healthcare.nationalreview.com/post/?q=ZjZhYmEzODZmZWViMDAyZWUwMjlkMzJiN2YyYTZmMWU=

[nathanm]

They better be in a hurry now.  They have to pass this thing before we learn any more.

Congressional Budget Office projections — from 2014 to 2025 Obamacare would provide an average of $83 billion per year in new taxpayer-funded health-care subsidies that would ultimately be paid to health insurers. That's ten times the $8.3 billion in combined annual profits made by America's ten largest health insurers. And, of course, Obamacare would also require that every American buy the health insurers' product under penalty of law.

I love articles that throw around numbers that have no logical connection.

That said, expect to see much profit taking in the next few years. Everybody in the health care system has got to be aware at this point that their continued price increases can not be long for this world. If it keeps up, there will be legislation that controls pricing somehow, whether by fiat, importing doctors, or whatever. Until that day, expect them to be more like the credit card companies.

After all, if the insurance companies have the stones to raise premiums an average of almost 20% in a year where they were making record profits, what can we expect from them when their profit numbers are looking weaker?

[heironymouspasparagus]

No, Conan, not buh, buh, buh...
it's;

Bo.  As in BOHICA.  Remember the mantra.  BOHICA.
(Bend Over, Here It Comes Again.)

[Red Arrow]

I heard a partial segment on the TV (forget which channel/etc) that some of the health insurance companies are only claiming 3% to 5% profit despite record number of $ profit.  Anyone else catch that?

[Conan71]

I heard a partial segment on the TV (forget which channel/etc) that some of the health insurance companies are only claiming 3% to 5% profit despite record number of $ profit.  Anyone else catch that?

I've heard similar numbers, industry average of about 2.5%. I have absolutely no idea how accurate that is nor who compiled the stats.  Those are narrow margins when compared to other industries, razor thin. Here's the double jeopardy if Nathan's premise of freezing or capping premium increases holds true:  Lets say the gov't arbitrarily says they will only pay X amount for premiums and premium subsidies but costs of drugs, procedures, and preventative care keeps going up. What happens when health insurers start to fail by paying out astronomical claims because now they are required now to take all pre-existing conditions and paying out claims for idiots who use the emergency room for physician visits? 

Somehow people are under the mistaken impression that they are owed coverage for pre-existing conditions without paying a higher premium for it.  How is that a scurrilous practice?  People with shitty driving records are routinely required to pay a higher premium than lower risk drivers because the insurance company is accepting a higher risk.  You pay higher interest rates or are denied credit entirely if you are a deadbeat. There are so many other areas there are higher prices which accompany a corporation taking on greater risk customers. Health insurance is not a God-given nor even a constitutional right.

If the government mandates coverage for everyone I can see a day when either insurance companies collapse under the weight of claims and the government goes into more deficit spending to rescue them or finally health insurance becomes "nationalized". I'm not so certain that's not the intention behind this.

I do realize I'm letting my mind run wild playing connect-the-dots and I probably stepped on some tender toes regarding pre-existing conditions and whether or not health insurance is a right.  Just putting it all in perspective.     

/edit: correcting and clarifying my iPhone short-hand

[Red Arrow]

Someone will clobber me for being picky about words but to me:

Health Insurance takes care of unexpected events like car insurance takes care of an accident you haven't had yet.

Health Care takes care of existing conditions.

Both are too expensive for the average and even somewhat richer than average American to pay for.

I don't have the perfect answer but don't think the present bill (or whatever it is) in Congress is the right answer, especially considering all the deals that had to be made.

[we vs us]

Not sure why you think an industry like healthcare is so brittle as to fail completely if costs are capped.  A more likely scenario is the the sector ceases to expand and might contract a bit as it gets more efficient to deal with smaller amounts of capital.  That's the point, right?  Not to kill it but to moderate an out-of-control sector of the economy. 

[Red Arrow]

One person's/organization's costs are another's prices or income.  Cap prices to a point of being unprofitable and the goods or service will be withdrawn.  There's been a lot of finger pointing but no definitive answer as to why the cost of health care is outpacing inflation so much.  There probably isn't just one cause.

[we vs us]

One person's/organization's costs are another's prices or income.  Cap prices to a point of being unprofitable and the goods or service will be withdrawn.  There's been a lot of finger pointing but no definitive answer as to why the cost of health care is outpacing inflation so much.  There probably isn't just one cause.

There's definitely a theoretical point where you can tax an industry too much and it dies away completely but that's no one's intention, and I think you can call the Dems extra cautious when it comes to that . . . they've taken many of the most robust ideas about cost control (hello public option!) and dumped those pretty quickly.

In general, though, is there an example in American history of a sector being taxed into oblivion?  That's one of the major prevailing fears in this whole debate, but I can't think of one instance where that's actually happened in the real world.  Prohibition might come close, but we all know how that turned out. 

[we vs us]

Also, since we're talking about CBO scoring, the senate bill (the bill currently in contention) will reduce the federal deficit by $118 billion between 2010 and 2019.

"CBO and JCT now estimate that, on balance, the direct (mandatory) spending and revenue effects of enacting H.R. 3590 as passed by the Senate would yield a net reduction in federal deficits of $118 billion over the 2010–2019 period. (Direct spending—as distinguished from discretionary spending—is spending that stems from legislation other than appropriation acts.)  In our earlier estimate, the budgetary impact was a net reduction in deficits of $132 billion.

The gross cost of the proposed expansions in insurance coverage over those 10 years is now projected to be $875 billion, reflecting subsidies provided through insurance exchanges, increased net outlays for Medicaid and the Children's Health Insurance Program (CHIP), and tax credits for small employers. Those costs are partly offset by revenues from an excise tax on high-premium insurance plans and net savings from other coverage-related sources, leaving a net cost of $624 billion for the coverage provisions. Other provisions affecting direct spending save $478 billion, on net—mostly in Medicare—and other provisions affecting revenues reduce the deficit by $264 billion, on net. Thus, the net effect on deficits of the bill as a whole equals $624 billion less $478 billion less $264 billion, or a reduction of $118 billion over the 2010-2019 period. In total, CBO and JCT estimate that the legislation would increase outlays by $355 billion and increase revenues by $473 billion between 2010 and 2019."

[Red Arrow]

There's definitely a theoretical point where you can tax an industry too much and it dies away completely but that's no one's intention, and I think you can call the Dems extra cautious when it comes to that . . . they've taken many of the most robust ideas about cost control (hello public option!) and dumped those pretty quickly.

In general, though, is there an example in American history of a sector being taxed into oblivion?  That's one of the major prevailing fears in this whole debate, but I can't think of one instance where that's actually happened in the real world.  Prohibition might come close, but we all know how that turned out.  

I wasn't thinking so much of oblivion as decreased supply as in the gasoline "shortage" of the early 70s.

That was also some form of price control rather than taxes.