The latest CBO report was released yesterday (click here) analyzing the specifications related to health insurance coverage that are reflected in the America’s Affordable Health Choices Act, which was released by the House Committee on Ways and Means on July 14. Here are the highlights (emphasis mine):

Looking ahead to the decade beyond 2019, CBO tries to evaluate the rate at which the budgetary impact of each of those broad categories would be likely to change over time. The net cost of the coverage provisions would be growing at a rate of more than 8 percent per year in nominal terms between 2017 and 2019; we would anticipate a similar trend in the subsequent decade. The reductions in direct spending would also be larger in the second decade than in the first, and they would represent an increasing share of spending on Medicare over that period; however, they would be much smaller at the end of the10-year budget window than the cost of the coverage provisions, so they would not be likely to keep pace in dollar terms with the rising cost of the coverage expansion. Revenue from the surcharge on high-income individuals would be growing at about 5 percent per year in nominal terms between 2017 and 2019; that component would continue to grow at a slower rate than the cost of the coverage expansion in the following decade. In sum, relative to current law, the proposal would probably generate substantial increases in federal budget deficits during the decade beyond the current 10-year budget window.

My take on this: If cost savings is the objective, the current plan will not get us there. Basically, it comes down to this — you can either expand health care coverage or reduce costs, but not both as the above analysis shows. It would take a miracle, not rhetoric, to pull that one off.

Michael Ramirez (HT: Tom Sullivan)

The House Ways and Means Committee might propose a tax on high-income Americans to help fund an overhaul of the health care system. The surtax probably would be levied on earners who make more than $250,000 per year. Another proposal favored by Republicans would tax employer-provided health benefits. See full story here.

Curious how this reminds me of the story of an economics professor at Texas Tech that said he had never failed a single student before, but had once failed an entire class. That class had insisted that socialism worked–that it was a great equalizer. No one would be poor and no one would be rich.

The professor then said OK, we’ll have an experiment in this class on socialism.

All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A. After the first test the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. But, as the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too; so they studied little. The second test average was a D! No one was happy. When the 3rd test rolled around the average was an F.

The scores never increased. Despite the bickering, blaming, and hard feelings, no one would study for the benefit of anyone else. To their great surprise, they all failed. The professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great; but when government takes all the reward away, few will try or want to succeed.