9/21/2009

The bizarre CBO estimated deficit numbers for the Baucus bill

From the WSJ:

The nonpartisan Congressional Budget Office on Wednesday said that a health-care measure released by Senate Finance Chairman Max Baucus (D., Mont.) would reduce the deficit by $49 billion over 10 years.

In a letter to Baucus, the CBO states the bill would cost a total of $774 billion, but would be offset by revenue-raising provisions, such as a 35% excise tax on high-cost health insurance plans, as well as spending reductions. The result, it said, would be a $49 billion reduction of federal deficits from 2010 to 2019. . . . .


Here is one huge mistake that the estimates are making:

The Obama/Baucus plan doesn't force people to buy insurance; it requires them to pay a tax if they don't. But the tax is so low that the end result will be the same as not requiring people to buy insurance. The tax for those who don't buy insurance ranges from $750 for the poorest single people to as high as $3,800 a year for families. Even without unlimited insurance benefits, the average insurance cost today is much higher: in 2008, it was on average $4,704 for individuals and $12,682 for families. But with no penalty for having a pre-existing condition, people will pay the tax and wait to buy insurance once they get sick. If people only buy insurance once they are already sick, insurance premiums will soar dramatically. In short order there will be much higher insurance premiums. . . .

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