Posts Tagged ‘GDP’

Bad News for Jobs Due to ObamaCare? Take the Long View.

Wednesday, February 12th, 2014

So, it’s been a rough January — a second month of anemic job creation, a new CBO report saying that ObamaCare could cost 250,000 jobs and continuing blasts of arctic froideur that have shut down even the redoubtable Alter Group offices for days.

This is when perspective matters: Cassidy Turley takes a 6-month long view in the US Employment Tracker to find good news:

Taking this approach, the U.S. economy is creating a monthly average of 178,000 net new jobs, consumer spending is growing at an annual rate of 3.1% and the ISM manufacturing index has been a robust 60.6.” Also, after the usual revisions in the economic data, we found that “real GDP grew at an annualized rate of 3.2% in the final quarter of 2013, driven by the largest increase in consumer spending in three years. Business confidence is now at an 11-year high; consumer confidence has held up; fiscal policy is less of a drag; and the Fed is now tapering because it generally likes what it sees. Commercial real estate fundamentals have been consistently tightening for three straight years. Although the past few weeks have allowed some doubt to resurface, the outlook remains upbeat.

Then there’s the matter of looking at the right statistics for you. Such as the fact that office-using jobs that drive so much of commercial real estate have been on a tear recently — 34,000 in January. Overall office-using jobs have surpassed pre-recession levels (after bottoming out in 2009).

We can’t take a long view on bone-chilling temperatures but let’s look at the Obamacare costing a quarter million jobs. Here’s portion of the CBO report, “The Budget and Economic Outlook: 2014 to 2024.”:

The ACA’s largest impact on labor markets will probably occur after 2016, once its major provisions have taken full effect and overall economic output nears its maximum sustainable level. CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor —given the new taxes and other incentives they will face and the financial benefits some will receive.

And therein lies the key phrase — “choose”. In other words, it is not jobs that will be eliminated but workers who will elect to retire, stay at home to raise the kids or go to a 3-day schedule so they have time to get another degree. They won’t feel tethered to their current employment because of the fear of not having health coverage.

GOP VP Candidate Paul Ryan Advocates “Medicare Premium Support”

Wednesday, September 5th, 2012

Now that Representative Paul Ryan (R-WI) has been selected by former Governor Mitt Romney (R-MA) as his vice presidential running mate, the debate is focusing on the Wisconsin representative’s plan to reform Medicare.  Known as Medicare Premium Support, it “refers to a system under which Medicare enrollees would pick from a menu of competing plans with a fixed government payment to help defray premium costs.  Enrollees would be on the hook for any charges above the government contribution.  But they could save money by selecting a plan with a premium below the federal subsidy.”

Ryan says that under his plan, the government’s contribution toward premiums will equal the cost of the second least expensive plan in any market — or traditional Medicare — whichever costs less.  Ryan believes that his plan is politically feasible because it doesn’t begin until 2022 with the result that it retains traditional Medicare for Americans who were 55 and older in 2011 — meaning that baby boomers are exempt from the changes.  Democrats who oppose the plan contend that Ryan’s Medicare overhaul would subject seniors to the vagaries of the private market, leaving them with little protection against rising premiums and negligible benefits.

So what is the difference between the Democratic and Republican cuts to Medicare?  The ACA stresses government control and central planning. The law creates a panel of 15 unelected government officials, called the Independent Payment Advisory Board (IPAB) to direct changes that will shrink spending by cutting physician and hospital reimbursement.  The Wyden-Ryan plan preserves the ACA’s targets for future Medicare spending, but uses competitive bidding.  Seniors would have the same benefits that they do now, and would have the option of choosing from several government-approved private insurance plans.

The Republican budget targets Medicare growth of GDP plus 0.5 percent, just as the 2013 Obama budget does. The difference lies in the fact that the GOP budget repeals the ACA, while maintaining that law’s Medicare cuts.  The Democratic budget leaves the ACA in place.

Writing in the Washington Post, Ezra Klein puts the difference in a nutshell:  “The difference between the two campaigns is not in how much they cut Medicare, but in how they cut Medicare.”

In an exclusive interview with Modern Healthcare magazine, Ryan says that “This is an idea whose time has come.  And it’s a bipartisan idea.  What Representative Ron Wyden (D-OR) and I tried to do was to plant the seeds of a bipartisan consensus.  We knew we weren’t going to pass it because of the politics.  We did this together to get the consensus-building started.”  Ryan believes that the plan’s chances for approval will greatly improve in 2013 — especially if the Romney/Ryan team wins the November 6 presidential election.  “I’m actually pretty optimistic,” he said, noting that the United States should reform healthcare on its own terms and “fix this on our terms” instead of borrowing European ideas.  “We believe there are far superior ways to get back to a patient-centered healthcare system, the nucleus of which is the patient and doctor — and not the government,” Ryan said.  “We believe consumer-driven, market-based reforms do more to alter the cost curve of healthcare inflation.”

If Ryan’s plan is enacted into law, people 55 and younger would see a change from one in which everyone gets the same set of government-paid benefits to one in which the government gives all senior citizens a fixed amount of money.  They could use this to purchase private insurance or pay a portion of the cost of enrolling in traditional Medicare.  Ryan has not said how much the premium support payment would be.  But he would limit the annual growth rate to no more than one-half percent more than the economy’s overall growth rate, even though healthcare costs are rising at a significantly faster pace.  Ryan’s plan would also raise the Medicare eligibility age to 67 from 65 by 2034.

Not so fast,” Democrats warn as partisans from both parties accuse the other side of throwing senior citizens under the bus.  “Make no mistake about it — these Republicans don’t believe in Medicare,” Obama campaign senior adviser David Axelrod said.  “They want to turn it into a voucher program.  And slowly, all the burden is going to shift to seniors themselves.  And that is not an answer to entitlement reform.”

Republicans counter that $716 billion in cuts to Medicare are already a part of the Patient Protection and Affordable Care Act (ACA).  An online video created by the Republican National Committee features Ryan saying that Democrats “have refused to make difficult decision because they are more worried about their next election than they are about the next generation.”  According to Ryan, “We won’t duck the tough issues; we will lead.”

Uwe Reinhardt, a healthcare economist at Princeton University disagrees, saying that rather than motivating insurers to control their costs, the Ryan plan will not benefit seniors.  “You’re essentially shoving these guys out on a boat, saying, ‘We’ll give you a push, but if the waves are rough, you’re on your own,” he said.  “It would really worry me if I were a middle-class American.”

Rest of the World Beats the U.S. on Healthcare Reform

Tuesday, May 22nd, 2012

As Americans debate whether the Patient Protection and Affordable Care Act (ACA) and its promise of guaranteed healthcare coverage should be overturned, a surprising number of less affluent nations are moving to provide medical insurance to all citizens.  Many political leaders globally have concluded that creating a system of universal healthcare is essential to remaining competitive and supporting economic growth.

After years of underfunding healthcare, China is completing a three-year, $124 billion initiative that will cover more than 90 percent of its population.  Mexico, which 10 years ago covered less than 50 percent of its population, just completed an eight-year drive for universal coverage that has noticeably expanded access to lifesaving treatments for diseases.  In Thailand, where the GDP per person is 20 percent of America’s, just one percent of the population doesn’t have health insurance.  Rwanda and Ghana — among the world’s poorest nations — are creating networks of insurance plans to cover their citizens.

“This is truly a global movement,” said Dr. Julio Frenk, a former health minister in Mexico and dean of the Harvard School of Public Health.  “As countries advance, they are realizing that creating universal health-care systems is a necessity for long-term economic development.”  Many countries are still struggling to improve the quality of their medical care.  And making health care affordable remains a challenge for most countries, as it does for the U.S., where about 15 percent of the population lacks coverage.

Today, the United States is the only one of the world’s richest nations that does not provide healthcare coverage for all citizens.  The Supreme Court is expected to hand down a ruling on a legal challenge to the ACA in June.

Some countries established public systems similar to those in Great Britain and Canada.  Others rely on a mix of government and commercial insurance, similarly to the ACA.  The Thai system, set up a decade ago, has survived years of political upheaval and a military coup.  “No party dares touch it,” said Dr. Suit Wibulpolprasert, a senior adviser to the Ministry of Public Health.

We are really an outlier,” said David de Ferranti, a former World Bank vice president who heads the Results for Development Institute, an international non-profit organization based in Washington.  That stands in sharp contrast to the United States’ leadership in education, he said.  Long before most European nations, the United States assured access to public schooling.

People are demanding responses from their governments,”  said Cristian Baeza, the World Bank’s director for health, nutrition and population.  In countries such as India, political leaders know that one of the surest ways to get votes is to promise better access to healthcare.

Will the ACA Survive the Supreme Court, 2012 Election?

Wednesday, February 1st, 2012

The 26 states that have challenged President Barack Obamas healthcare law face several dilemmas as they try to convince the Supreme Court to declare the law’s Medicaid expansion unconstitutional   The two lower courts that heard the Medicaid challenge ruled in favor of the Obama administration, even as those judges struck down the healthcare law’s individual mandate. Legal experts on both sides of the mandate debate were surprised that the Supreme Court agreed to also hear the Medicaid piece of the state’  lawsuit.  The healthcare law’s supporters claim that the states erred in their initial brief on the Medicaid expansion, which was filed with the Supreme Court.

According to the states involved in the lawsuit. the ACA’s Medicaid expansion is “coercive.” Although state participation in the program is strictly voluntarily, the brief argues, the healthcare law makes it impossible for states to opt out of Medicaid.  The brief tries hard to link the Medicaid expansion to the individual mandate, arguing that states won’t be able to exercise their legal right to leave Medicaid because it’s the only way for Medicaid-eligible residents to fulfill the mandate.

“While the (Affordable Care Act) purports to leave states’ participation in Medicaid nominally voluntary, multiple aspects of the Act evince Congress’ keen awareness that, in fact, no state will be able to reject its new terms and withdraw from the program,” the brief says. “Most obviously, the ACA’s individual mandate requires Medicaid-eligible individuals to obtain and maintain insurance.”  But most Medicaid-eligible people would be exempt from the mandate, said Timothy Jost, a law professor at Washington and Lee University and a supporter of the health law.

Then there’s the Supreme Court case, which will be heard in the spring and a verdict announced prior to the November presidential election. According to Kurt Mainwaring, a ksl.com contributor, “Far-reaching consequences of the court’s ruling will likely impact both the cost of healthcare and the outcome of the 2012 elections.  If the Supreme Court rules that ACA is constitutional, healthcare costs will likely continue to rise — although at a slower rate than if the law were determined to be unconstitutional.  At present, healthcare costs make up approximately 18 percent of GDP. If expenditures continue on their current trajectory, “the share of GDP devoted to healthcare in the United States is projected to reach 34 percent by 2040.”  Translated to real numbers, the Department of Health and Human Services (HHS) notes that Americans paid approximately $1,000 annually in healthcare costs in 1960; more than $7,000 per year in 2007; and are projected to pay more than $13,000 per year by 2018.  This kind of increase in healthcare costs is not sustainable — and these kinds of projections are part of the reason ACA was enacted in the first place.

Beach Conger, a Vermont internist writing in the Burlington Free Press believes that “Medicare for All” — a possibility that was raised during the lengthy debate over the ACA — should be reconsidered.  According to Conger, “Medicare and I were born in the same year. Professionally speaking, that is. We were raised together, and we have been married to each other for what seems an eternity. As with any long-term relationship, we have had our ups and downs, but we have both matured over the years, and I believe we are both the better for it. Without being too vain, I have to say I have done a better job at providing health care, and I have to admit that Medicare has helped me do it.  At first, it just made sure that those retired people who wished to pay me the fees to which those in my line of work have become so accustomed, could actually do so. But eventually it realized that there was more to the business than just money, and it began to keep an eye over my shoulder, making sure I was not leaving undone those things which ought to be done and not doing those things which I ought not.  So I can’t help but think, why not Medicare for everyone? It would be so simple. And that’s when I realized.  It was too simple.”

Dr. Conge, it should be pointed out, lives in Vermont, to date the only of 50 states to enact a single-payer public option — Green Mountain Care.

Medicare, Medicaid Costs Rising More Slowly

Tuesday, January 24th, 2012

Healthcare spending nationally grew slowly for the second successive year in 2010, bringing it in line with growth in the U.S. economy as a whole, according to the Department of Health and Human Services (HHS).  Spending rose by 3.9 percent in 2010, to $2.6 trillion, while the GDP rose 4.2 percent, according to HHS, which published its findings in the journal Health Affairs.  In 2009, spending increased nearly the same by 3.8 percent, but in contrast it’s growth rate was twice that by 7.6 percent in 2007.  Spending increases frequently hit double digits in the 1980s and 1990s.  While spending growth in general remained slow, premiums for people in private insurance plans grew faster for the first time in seven years than what was spent on their care, according to the Centers for Medicare and Medicaid Services (CMS).  Premiums in 2010 rose 2.4 percent, slightly less than the 2.6 percent increase in 2009, although private health insurers’ spending on actual benefits rose only 1.6 percent in 2010, down from 3.7 percent in 2009.

Healthcare represents 17.9 percent of the U.S. economy, the same proportion as in 2009, according to a government report. “Persistently high unemployment, continued loss of private health insurance coverage and increased cost sharing led some people to forgo care or seek less costly alternatives than they would have otherwise used,” the report said.

The report showed that the federal government paid 29 percent of the nation’s healthcare bill in 2010, up from 23 percent in 2007. Some of that increase reflects a transitory increase in federal aid to states to enroll more uninsured people in Medicaid. The percentage of spending by private businesses and state and local governments fell.

The recession played a large role in impacting spending, CMS officials said.  Because fewer people were insured, and private insurers generally picked up less of the cost, patients went to the doctor and hospital less frequently.  The answer may go beyond the recession.  “The utilization slowdown is at least in part structural, and not just cyclically driven by the economy, and the adoption of higher cost sharing plan designs will result in some level of permanent slowdown in trend,” said Ana Gupte, a senior analyst at Sanford Bernstein, which conducts research for investors.

“Premiums grew faster than benefits for the first time in seven years, and benefits grew at their slowest rate in the history of the accounts, according to Anne Martin, a CMS economist.  Martin said this was because private health insurance companies lost enrollees as people were laid off, moved to cheaper health insurance plans as a result, cost-sharing increased.

Karen Ignagni, president of America’s Health Insurance Plans, said that the portion of premiums “allocated to health plans administrative costs was among the lowest in recent years, despite the fact that health plans have been in compliance with the healthcare reform law.”

Additionally, spending on prescription drugs declined in 2010.  Not only did individuals buy fewer drugs, but there were also more switches from brand to lower-cost generic medications. According to CMS, fewer new drugs came onto the market.

Paul Ginsburg, president of the Center for Studying Health System Change, a Washington research group, said the report didn’t address the biggest question: “When the economy gets strong again, do we just return to the old business as usual?  Probably,” he said. “But there’s a chance that the experience of people economizing may have longer-lasting effects.”

The Obama administration was pleased with the report and called it good news for the healthcare law, although some researchers found the law had a less than 0.1 percent impact on national health spending in 2010.  “These numbers do not take into account all of the cost-saving provisions in the Affordable Care Act that are still being implemented.  But they do show why the Affordable Care Act is so important,” senior White House adviser Nancy-Ann DeParle said. According to DeParle, the insurance regulations in the law will keep insurance companies “in check.”

The phasing in of the patient Protection and Affordable Care Act (ACT) which will expand insurance coverage to as many as 32 million people, will incur larger cost increases later in this decade. National health spending is expected to increase by 8.3 percent in 2014, when the most ambitious coverage expansions take effect, according to CMS projections.  “The law will control the growth of healthcare spending through fraud prevention, better coordination of care, disease prevention and overhauling insurance markets,” DeParle said.

According to DeParle, “Starting in 2011, insurance companies were required to publicly disclose and justify any premium increases larger than 10 percent. Many states have the authority to reject unreasonable premium increases and the Affordable Care Act gives states $250 million to strengthen their rate review programs. Additionally, insurers are required to spend at least 80 percent of your premium dollars on healthcare expenses instead of overhead and profits.”

Healthcare Costs Wiping Out Your Income Gains

Monday, September 26th, 2011

If Americans’ incomes are not growing, part of the blame can be placed on the high cost of healthcare.  According to the Washington Post’s Sarah Klitt, “All evidence points to American voters not really caring about rising healthcare costs.  But here’s one pretty compelling reason they should:  The escalating cost of healthcare has wiped out nearly all income gains made by the average American family in the past decade.”

Research in the September issue of Health Affairs notes that American physicians are paid more per service than in other countries — in some instances, double the amount.  There is also a larger gap between fees paid for primary care and specialty care, when compared with other industrialized countries.  These higher fees translate to higher incomes for American physicians than those earned by their foreign counterparts, and are the primary driver of higher overall spending on physicians’ services.

The study — by Miriam Laugesen of the Mailman School of Public Health at Columbia University and Sherry A. Glied, also of the Mailman School and presently Assistant Secretary for Planning and Evaluation at the Department of Health and Human Services (HHS) — compared fees paid by public and private payers for primary-care office visits and hip replacement surgery in Australia, Canada, France, Germany, the United Kingdom, and the United States.

The researchers determined that American primary-care physicians on average are paid 27 percent more by public payers for an office visit, and 70 percent more by private payers for an office visit, compared to the typical amount paid in other nations.  The largest difference in fees paid to American physicians versus fees paid to doctors in other countries was for hip replacements.  American physicians earned 70 percent more for these procedures by public payers, and 120 percent more by private payers, than the average fees paid to physicians in other countries.

“The gap between the fees paid for primary care and those for orthopedic services such as hip replacements is significantly bigger in the United States than it is in other countries,” Laugesen said.  “For decades, policymakers and medical leaders in this country have debated financial incentives to spur more doctors to become primary-care physicians.  Our work shows that continuing attention needs to be paid to the difference in payments across specialties, and how we can get better value for those expenditures.”

Additionally, American physicians reported higher salaries when compared with the other countries, despite the fact that there was minimal difference in the volume of services provided.  Laugesen and Glied suggest that the differences may reflect the fact that American physicians are paid more for their skill and time than doctors in other countries.  Whether or not those higher payments have merit is a question that the study did not address.  American primary-care physicians earned the highest average annual incomes ($186,582) while French ($95,585) and Australian ($92,844) primary-care physicians earned the lowest.  American orthopedic surgeons earned the highest average annual incomes at $442,450, followed by $324,138 for surgeons in the UK.  Although UK surgeons earned 50 percent more than surgeons in the other comparison countries, they earned 30 percent less than American orthopedic surgeons.

A study by the RAND Corporation determined that rapidly rising healthcare costs have eaten nearly all the income gains made by middle-income American families over the past 10 years, leaving them with just $95 per month in extra income, after accounting for taxes and price increases.  Had healthcare costs risen only as fast as the cost of other goods and services from 1999 to 2009, the same family would have had an additional $545 per month to spend in 2009.

“Accelerating healthcare costs are a primary reason that the so many American families feel like they are just treading water financially,” said David Auerbach, the study’s lead author and an economist at the RAND Corporation, a non-profit research organization.  “Unless we reverse the trend, Americans increasingly will notice that health costs compromise their other spending options.”

Between 1999 and 2009, healthcare spending in the United States nearly doubled, from $1.3 trillion to $2.5 trillion.  During the same timeframe, the percentage of the nation’s GDP devoted to health care rose from 13.8 percent to 17.6 percent.  Per-capita healthcare spending rose from $4,600 to just over $8,000 a year.

Although the numbers are arresting, they don’t necessarily translate to the daily routine of American families because many healthcare costs are hidden, according to the researchers.  Auerbach and co-author Dr. Arthur L. Kellermann, director of RAND Health, combined information from multiple sources to describe the obligation that rising healthcare costs placed on middle-income families with employer-sponsored health insurance from1999 to 2009.

“The complex way that the United States pays for healthcare often obscures the consequences of healthcare cost growth for most American families,” Kellermann said.  “This makes the challenge of controlling healthcare costs that much harder.”

Study: U.S. Needs a Comprehensive National Health Strategy

Monday, February 7th, 2011

The United States needs to formulate a consistent national strategy to address life expectancy and overall health, according to recent report from the Institute of Medicine (IOM).  “Although the United States invests over 17 percent of its gross domestic product on medical care – far more than any nation – we lag behind other countries in several measures of health,” said Marthe Goldman, chairwoman of the committee that wrote the report.  “Our understanding of more effective and efficient strategies for improving health is hampered by inadequacies in the current system.”

The IOM report, which was sponsored by the Robert Wood Johnson Foundation,  notes that the Department of Health and Human Services (HHS) should take the lead to coordinate and provide pertinent health information and statistics to Americans.  Additionally, HHS should assist in efforts to integrate population health data collection, analysis and reporting, as well as offer guidance on how to develop health indicators and analyze the effects of these over time.  Finally, the nation should adopt a single-summary measure of the population’s health to serve as the GDP equivalent for the health sector.

Typically, the United States and other nations have used death rates as the standard measure of population health.  “However, life expectancy is a blunt tool.  It cannot capture the diminution in life experience and capacities that is associated with the chronic illnesses and injuries that are of increasing prevalence in modern society,” according to the report.

The International Health Partnership, which is dedicated to improving health services and health outcomes, issued a white paper in July, 2009, assessing national health strategies and plans.  According to the paper, “The way a joint assessment is done will be unique to each country, but based on some key principles:  it will be country demand driven; be country led and build on existing processes; be as light as possible without being superficial; include an independent element; and engage civil society and other relevant stakeholders.”

Australia has taken the lead in setting a comprehensive national healthcare strategy.  With the goal of being the world’s healthiest country by 2020, the strategy set in April, 2008, by the National Preventative Health Task Force for the Minister for Health and Ageing focuses on eating healthier foods; reducing obesity; smoking cessation; and addressing the health and social issues associated with heavy drinking.

Healthcare Spending Slowed in 2009

Tuesday, January 25th, 2011

Americans’ healthcare spending grew by just four percent in 2009 (the last year for which statistics are available), the smallest annual increase in 50 years. This suggests that Americans did not seek healthcare because of lost jobs and a lack of healthcare insurance due to the recession.  At the same time, healthcare insurance premiums increased at a faster pace than in 2008.  Additionally ,the number of Americans with coverage fell by 6.3 million.  Out-of-pocket spending on healthcare showed a slight increase.  Medicaid spending rose sharply by nine percent, compared with less than five percent in 2008.  This is a result of more people qualifying for Medicaid, again because of the recession.

The statistics, released by the Department of Health and Human Services (HHS), are a sign that the recession left a deep imprint on healthcare in America – far worse than other recent recessions.  “Job losses caused many people to lose employer-sponsored health insurance and, in some cases, to forgo health-care services they could not afford,” according to economists and statisticians at HHS’s Centers for Medicare and Medicaid Services.  The report, which has been compiled by the government annually since 1960, is the most recent snapshot of spending across the healthcare system.

Healthcare spending in the United States totaled $2.5 trillion in 2009, adding up to an average of $8,068 per person.  The four percent rise recorded in 2009 compares with more than six percent in 2007, eight percent in 2005 and double-digit increases in 1990 and 1980.  Even with the slowdown in spending, healthcare spending still comprised 17.6 percent of the GDP in 2009.

Anthony Downs On Financial Reform

Tuesday, September 14th, 2010

Anthony Downs discusses the ins and outs of financial reform.  The nation’s financial system needs significantly more regulation than exists now.  The lack of tough regulatory powers strongly impacted the recent financial crash and the Great Recession that ensued.  The good news is that the Obama administration is moving firmly in this direction with financial reform legislation a critical item on its agenda.  This is the opinion of Anthony Downs, a senior fellow with the Brookings Institution and former President of the Real Estate Research Corporation.  In a recent interview for the Alter+Care Podcasts, Downs said that between 1980 and 2007, the value of international capital markets – including bank deposits, assets, equities, public and private debt – quadrupled relative to the world’s GDP, lifting millions of people out of poverty.  Although unprecedented, this growth relied heavily on borrowed money to finance higher living standards and highly leveraged loans with limited reserves backing them.  In the end, the growth was unable to be sustained.

The financial reform legislation currently undergoing reconciliation by a Senate-House conference committee is not a reinstatement of the 1933 Glass-Steagall Act – which separated investment and commercial banking — because banks will still be allowed to deal with securities.  Under the new law, banks will have to register derivatives with some type of formal exchange and maintain records on who is borrowing money and under what terms.  This marks a significant change from before the Great Recession, when derivatives were traded with virtually no oversight.

Downs believes that former Federal Reserve Chairman Alan Greenspan contributed to the financial crisis in two ways.  In 2001, when Greenspan was informed that there was fraud in the subprime housing market and that he should do something about it, he refused to take action because he didn’t believe in regulation.  According to Downs, “that was a terrible mistake and meant that all the horrible loans made in the subprime market could continue unchecked.”  Greenspan’s second error was to maintain low interest rates for as long as he did at a time when an enormous amount of capital was coming into the United States economy from overseas.  Because investors were avoiding the stock market, they put their money into real estate.  That drove the price of properties sky high and destroyed the concept of intelligent underwriting and evaluating the risk before approving the loan.

CBO Warns That Healthcare Reform Will Increase Federal Spending

Monday, July 26th, 2010

Reform translates to more federal healthcare spending.  The federal government’s share of dollars spent on healthcare is expected to soar from five percent of the current GDP to approximately 10 percent by 2035.  The increases are likely to continue unabated after that.  These projections are based partly on the recently passed healthcare reform legislation, which is expected to increase federal spending in the next 20 years, according to the Congressional Budget Office’s (CBO) analysis, “The Long-Term Budget Outlook”.

“The retirement of the baby boom generation portends a significant and sustained increase in the share of the population receiving benefits from Social Security, Medical and Medicaid.  Moreover, per-capita spending for healthcare is likely to continue rising faster than spending per person on other goods and services for many years,” according to the report.  The CBO predicts that these factors will increase federal spending relative to the overall economy in the future.  Only a major change in government policy will reverse this trend.  Once all provisions of the new healthcare law are implemented in 2014, there is a strong possibility that federal spending will decrease by 2030.  According to the CBO, reform could yield reduced spending over time.

Peter Orszag, director of the White House Office of Management and Budget, notes “CBO reiterates that the Affordable Care Act will reduce the deficit by more than $100 billion in the current decade and more than $1 trillion in the decade after that – which represents the most deficit reduction enacted since the 1990s.”