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Friday, November 20, 2009

Small Biz Health Care Daily: About Those Cost Estimates…

Government is notorious for being way off on how much new programs eventually wind up costing. One reason is that spending cuts or spending restraint that are promised when a bill is passed rarely come to fruition. For good measure, programs just keep on expanding, while government has no incentives to control costs.

Has that process already started with the health bill being considered in the U.S. Senate?

On Friday, November 20, The Hill reported the following:

Senate Democrats' newly unveiled healthcare bill could cost as much as $1.6 trillion over the next decade, nearly double the amount the Congressional Budget Office first predicted, a former CBO official said Friday. In an estimate released this afternoon by the conservative-leaning American Enterprise Institute (AEI), departed CBO analyst Joseph Antos stressed his former employer's prediction that the bill would cost $848 billion actually depends on future Medicare cuts and reforms Congress is unlikely to authorize or enforce.

Antos is worried that changes in reimbursements for doctors and hospitals will never materialize, and that the bill would add substantially to the deficit over the coming decade. His concerns are right on the mark. Interestingly, as The Hill noted, the actual CBO estimates hinted at similar concerns.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

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