The Congressional Budget Office (CBO) Director, Douglas Elmendorf, sent Chairman of the House Ways and Means Committee, tax cheat Charles Rangel, a letter on October 29, 2009. That letter included a preliminary analysis on the cost of H.R. 3962 the Affordable Health Care for America Act. The analysis concluded that-halleluiah- it will reduce the federal deficit by $104 billion. Like any good fairytale, this requires a suspension of disbelief.

Let’s just examine a few statements imparted to the Honorable Chairman.

 The CBO assessment states that the proposed government run public health insurance plan assumes that it would have lower administrative costs than the private plans and “would typically have premiums that are somewhat higher than the average premiums in the private plans in the exchanges.” Who in their right mind believes that the government has a lower administrative cost for anything done in the private sector? Higher premiums for people who won’t be paying anything mean higher taxes for everyone else.

Additionally, the report states that savings will ultimately arise from the fact that the public plan will “… engage in less management of utilization by its enrollees and attract a less healthy pool of enrollees.” Therefore, they expect to not control the amount of health care the sickest people utilize and this will bring down costs. This is the reason

that Medicare and Medicaid crippled the budget in the first place. Truly, this is the contemplation of morons.

Part of H.R. 3962’s savings will come through reducing payments to Medicare, Medicaid and related programs by $426 billion over the ten year budget estimation. This will be accomplished in part by “permanent reductions” (read price fixing) in payments to Medicare services sans those to physicians. What this means is that the government will basically destroy businesses and jobs which supply durable medical goods and services such as diabetic supplies, nebulizers, certain medications and home health services to mention a few. Well, it wouldn’t meet the requirements of a government program if it didn’t decimate something. Is anyone still holding on to their AARP card?

Doctors aren’t so smart. The American Medical Association (AMA) is fully supportive of H.R. 3962. This probably stems from the fact that they get a teacher’s pet exclusion from what I mention in the previous paragraph. The CBO states that the 21% reductions in Medicare payments slated to take place are still in the bill. Moreover, any increases in further payments will be below the level of inflation so you will never crawl out of the hole. And, “Those payment rates and rules may differ from the current law assumptions underlying the CBO’s baseline projections.” Has anyone at the AMA ever heard of “bait and switch”?

Spurious accounting is revealed in H.R.3962 thanks to the non-partisan CBO. There is a $72 billion slight of hand taking place in this legislation. The Community Living Assistance Services and Supports (CLASS) program, a long term care insurance scheme,

is credited with reducing the deficit by that amount. Presented as a voluntary insurance (until it is mandated), its premiums are counted in the black. However, the CBO estimates that by the time most people grow old enough to utilize it, around 2029; it will start to add to the national deficit. This, of course does not show on the books because the CBO analysis only evaluates 2009-2020. Presto,Change-o another unsustainable government program adding to the $89 trillion unfunded liability in health care.

Just as in H.R 3200, the CBO does not count the “discretionary costs” of H.R.3962.

This means it does not account for one dime of expanding the bureaucracy to accommodate this monstrosity. Neither does it count the costs of the multitudes of grants for programs yet to be created and legislated in the bill. I am certain that it will wash away the paltry $104 billion in deficit reduction like a tsunami.

In its last few pages the CBO issue a “caveat” to the Chairman. It warns- “For a number of reasons, the preliminary analysis that is provided in this letter does not constitute a final and comprehensive estimate for HR 3962”

Today, Senator Judd Gregg (R-NH), ranking member of the Senate Budget Committee, stated that when H.R.3962 is fully funded it will cost “more than $3 trillion dollars over ten years.”

I thought fairy tales were supposed to end well.