But while the President’s most ardent supporters are trying to explain to each other why the benefits of the bill do not start until 2014, they are openly admitting that Obama’s deficit busting claims are complete fiction:

The Washington Post’s Ezra Klein: “The delay is a budget trick, an attempt to lower the 10-year cost of the bill at the expense of the very people we’re trying to help.”

Mother Jones‘ Kevin Drum: “I’m pretty sure the 2014 date is mostly due to budget finagling. This stuff can’t be done overnight, but I’ll bet most of it could be implemented within 12 months, and it could certainly be implemented within 24.”

Talking Points Memo’s Josh Marshall: “My impression is that some of the delays are there because it makes the budgetary accounting work better in terms of deficit neutrality. And I know the Dems would likely lose critical support without being able to show that the overall bill actually lowers the deficit. But if that’s the main reason, I suspect the legislative authors may be too clever by half since they may be slitting the bill’s and perhaps their own throats in the process.”

The conveniently shifted budget window of the bill’s spending benefits is just the tip of the iceberg when it comes to Obamacare’s deficit spending chicanery. Heritage’s health care team reports:

The Costly “Doctor Fix.” Every year, because of congressionally created formulas in Medicare physician payment, Congress must vote to suspend these pre-ordained payment systems that would automatically cut Medicare payments to physicians. If enacted this year, these cuts would reduce physician payment rates by 21 percent.

Physicians believe, correctly, that unless there is a fundamental reform of Medicare payment, many physicians will reduce their Medicare practice or stop seeing new Medicare patients, thereby reducing the accessibility of Medicare beneficiaries to physician care. Both the House and the Senate have acknowledged this as part of their agendas for health care reform.

However, to make their bills appear less costly, the leadership of both houses has removed the doctor fix and its more than $200 billion price tag from their health care bills and presented it as a separate bill. This enables Senator Reid to claim that his bill will reduce the deficit, but the CBO estimates that the House bill (H.R. 3961), combined with the “doctor fix” bill (H.R. 3962), would “add $89 billion to budget deficits over the 2010-2019 period.” The Senate bill plays the same shell game, creating the appearance of deficit reduction by ignoring the inevitable cost of the doctor fix.

The True Costs of the CLASS Act. The Senate bill, like the House bill, includes the Community Living Assistance Services and Supports (CLASS) Act, which would create a new government health care program for long-term health insurance. This provision creates a national insurance trust that would provide benefits for seniors and the disabled by creating a payment update in Medicare for skilled nursing facilities and home health care providers.

The CLASS Act is intended to pay for itself with collected premiums. The premiums would produce positive revenues for the government for the first 10 years, appearing to reduce the federal deficit during this time. However, as the CBO points out, while “the program’s cash flows would show net receipts for a number of years, [this would be] followed by net outlays in subsequent decades.” Thus, the CLASS Act appears self-sufficient for the first 10 years but starts running a deficit soon thereafter.
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Unreliable Medicare Cuts. The Senate bill depends on cutting Medicare to pay for its $1.2 trillion coverage expansion. Concerning the impact on Medicare enrollees, as CBO Director Doug Elemendorf explained, the bill would require a substantial reduction in the future growth of per capita beneficiary spending over the next 20 years compared to the previous 20 years.

Proponents of the Senate legislation claim that Medicare spending reductions would result in higher efficiencies. But as James C. Capretta, a Fellow at the Ethics and Public Policy Center, argues, “despite all of the talk of ‘delivery system reform,’ the Senate Democratic plan would not transform American medicine to make it more efficient.”[16] The dramatic savings depend on conventional Medicare provider cuts, not on meaningful Medicare reform. Furthermore, as demonstrated by the ongoing effort to correct the Medicare physician payment formula, it is unlikely that Congress would allow such deep cuts to occur in Medicare.

Moreover, these Medicare cuts include more than $100 billion in “savings” from changes in Medicare Advantage plans, a move that would directly affect the benefits of millions of seniors. In his analysis of the Senate bill, Foster confirmed that these changes would result in “less generous packages” and that enrollment “would decrease by about 33 percent.”

“But both the Congressional Budget Office and the chief actuary for the Medicare program have expressed misgivings. The Medicare actuary, Richard S. Foster, cited ‘a very serious risk:’ Adverse selection — sicker people signing up for the program and the healthier staying away — ‘would make the CLASS program unsustainable.’ He said that even beginning premiums would have to be $240 a month. Likewise, CBO director Douglas W. Elmendorf warned that ‘the CLASS program could be subject to considerable financial risk in the future if it were unable to attract a sufficiently healthy group of enrollees.’”

The Washington Post is dead on. Here is how Heritage’s health care team analyzed the CLASS Act portions of Obamacare:

“The True Costs of the CLASS Act. The Senate bill, like the House bill, includes the Community Living Assistance Services and Supports (CLASS) Act, which would create a new government health care program for long-term health insurance. This provision creates a national insurance trust that would provide benefits for seniors and the disabled by creating a payment update in Medicare for skilled nursing facilities and home health care providers.”

“The CLASS Act is intended to pay for itself with collected premiums. The premiums would produce positive revenues for the government for the first 10 years, appearing to reduce the federal deficit during this time. However, as the CBO points out, while “the program’s cash flows would show net receipts for a number of years, [this would be] followed by net outlays in subsequent decades.”[14] Thus, the CLASS Act appears self-sufficient for the first 10 years but starts running a deficit soon thereafter.”

Read Heritage’s full analysis here.

The Chief Actuary for the President’s own Centers for Medicare and Medicaid Services issued an extensive analysis of the pending Reid bill and House-passed bill. The Lewin Group also released an analysis of the House and Senate bills. These reports provide a comprehensive overview and impact of the legislation. Here are a few important facts from the reports:

More Health Care Spending, Not Less
A key argument by the President and Congress for health care has been to bring health care spending down. However, both studies expose that instead of bring health care spending down, the House and Senate bills would increase health care spending.

– The Actuaries report estimates that health care spending would increase under the Senate bill by $234 billion between 2010 and 2019 and $750 billion between 2010 and 2019 under the House bill.

– The Lewin Group estimates the Senate bill would increase health care spending by $305 billion between 2010 and 2019 and $781 billion in the second decade. Under the House bill, Lewin Group estimates health care spending would increase by $425 billion between 2010 and 2019 and $955 billion in the second decade.

Adds to the Deficit, Not Reduces
In his address to Congress, the President promised the American people the bill would not add one dime to the deficit. While that may be technically correct, it is does not show the whole picture. The House and Senate bills excluded – not by accident – the costly provisions to the Medicare physician payment formula. The Lewin Group considered the impact of incorporating the costly physician payments changes into the larger health care bill to show the full impact on the deficit.

– The Lewin Group estimates that when including the impact of correcting the Medicare physician payments, the federal deficit would increase by $196 between 2010 and 2019 and $765 billion in the second decade under the Senate bill. Under the House-passed bill, the federal deficit would increase by $77 billion between 2010 and 2019 and $591 billion in the second decade.

Costs and Premiums Go Up for Many
Although not highlighted as often anymore, the President promised that health insurance premiums would go down as a result of these bills. The analysis by Lewin Group actually shows there are big losers under the Senate and House bills.

– Once fully implemented, health care spending per worker will increase for all employers who do not currently offer coverage — $316 per worker under the Senate bill and $800 increase per worker under the House bill. Depending on the firm size, it can get even worse. For example, under the Senate bill, employers with fewer than 10 workers would see a cost increase of $374 per worker. Under the House bill, employers with more than 100 workers would see an increase of $1,182 per worker.

– Once fully implemented, average annual health care spending per family would also increase — $66 per family under the Senate bill and $83 per family under the House bill. While spending may go down for lower income families, families earning over $50,000 would see an increase of over $200 in annual health care spending under both the Senate and House bills, increasing further by income.

– Currently uninsured families (with one or more uninsured members) would face significant increase in health care spending. The Lewin Group estimates uninsured families would pay $1,225 more per family/per year under the Senate bill and $1,308 more per family/per year under the House bill.

Loss of Employer Based Coverage
As a result of the structure of the House and Senate bills, many employers would find it advantageous to drop their existing coverage. Therefore, workers who currently have employer-based coverage would be transitioned out of their existing coverage.

– The Actuary’s report estimates that the number of people currently with employer based coverage would drop by 17 million under the Senate bill and 12 million under the House-passed bill.

– The Lewin Group estimates 16 million employers would drop coverage under the Senate bill and 18 million employers would drop coverage under the House bill.

No Choice for the Poor
One major theme of the health care debate has been to increase choice and competition in the health care system. Unfortunately, according the Actuary’s report and the Lewin Group, millions of uninsured Americans will not have choice, but forced to join a poor quality, government-run health care plan – Medicaid.

– The Actuary’s report estimates about half (18 million) of the newly insured will end up on Medicaid as a result of the Senate bill and House bills.

– The Lewin Group estimates 14 million more people would end up on Medicaid under the Senate bill and 12 million more under the House bill.

Millions Remain Uninsured
Besides claims to bend health care spending down, advocates for these proposals claim expanding coverage as a major goal for the trillion dollars legislative proposals. However, according to the Actuaries report and the Lewin analysis, millions of people would still remain uninsured under the House and Senate bills.

– The Actuary report estimates 19 million Americans would remain uninsured under the Senate bill and 18 million Americans would remain uninsured under the House bill.

– The Lewin Group analysis estimates 18 million Americans would remain uninsured under the Senate bill and 16 million would remain uninsured under the House bill.

Sen. Ben Nelson (D-NE)
As we have thoroughly documented before, there are nearly two dozen abortion funding prohibitions in current federal law that reflect two basic principles: 1) that, except in situations involving the life of the mother, rape and incest, the federal government will not pay for or reimburse for abortions under federal programs like Medicaid; and 2) that, with the same exceptions listed above, the federal government will not subsidize insurance plans that offer coverage for abortion. This is why the Federal Employee Health Benefits (FEHB), military insurance through TRICARE, and the Indian Health Service do not cover abortion unless the mother’s life is at risk.

Reid’s health bill would change all that, forcing Americans to subsidize elective abortions for the first time in more than 30 years. Nelson told Face the Nation this Sunday: “I still have the unique issue of abortion. I’ve said I can’t support the bill with the abortion language that’s there.”

Pro-abortion Democrats in the Senate are going to have to vote for a Stupak-Pitts-like amendment, reaffirming our nation’s policy not to use taxpayer money for elective abortions, before Nelson will become the 60th vote.

Sen. James Webb (D-VA)
In the Winchester Star today, Webb announced that he is “still undecided” on how he will vote. Webb voted with conservatives five times for amendments that would have prevented Reid from stealing almost $500 billion from Medicare to pay for his massive new health insurance company bailout. Webb also described himself as a “long-time supporter of Medicare Advantage programs which have, in my view, greatly improved services in rural areas of Virginia.”

Webb may want to pay particularly close attention to the latest report from the non-partisan and independent Centers for Medicare and Medicaid Services (CMMS), the agency in charge of running Medicare and Medicaid, which reads:

Lower benchmarks would reduce [Medicare Advantage] rebates to plans and thereby result in less generous benefit packages. We estimate that in 2015, when the competitive benchmarks would be fully phased in, enrollment in MA plan would by 33% (from a projected level of 13.7 million under current law to 9.2 million under the proposal).

Sen. Claire McCaskill (D-MO)
McCaskill told the Associated Press this weekend: “The whole reason we’re doing this bill is to bring down cost, first for the American people in health care, and secondly for the deficit.” AP adds: “Asked if she would vote against the bill if it raised health care costs overall, she said, ‘Absolutely.’”

According to the same CMMS study mentioned above, Reid’s health care bill will not bring down the cost of health care. Instead, the bill does the opposite, raising national health expenditures by $234 billion, bending the cost curve in the wrong direction. And according to the Congressional Budget Office (CBO), the Reid bill raises health insurance premiums for millions of Americans, which is exactly what happened when similar legislation was passed in numerous states.

Finally, McCaskill is an honest Senator who recognized Reid’s attempt to separate the Medicare “doc fix” as the dishonest shell game that it was. When the cost of the doc fix is included in the Reid bill, Obamacare ends up adding $196 billion to the deficit in the first 10 years and $765 billion in the second decade.

And pay particular attention to what Baucus says at the beginning of the clip about excluding the cost of the doc fix. Add that $300 billion to the bill and the true cost of Obamacare rises to almost $3 trillion.

CBO assumes that large group plans will shift some of their older, sicker workers to the non-group market. Approximately one-fifth of the non-group market will consist of workers who formerly had insurance through their employer. This “crowding out” occurs as government subsidized plans displace private insurance. By shifting these high-cost workers to the non-group market, group plans can offset the higher taxes under Senator Reid’s plan and thus keep premiums flat for insurance purchasers.

CBO found that the largest effects are on the non-group market, approximately 17% of the entire health insurance market. Families that purchase non-group health insurance could pay up to 16% more than they would if the Reid Bill had not taken effect. CBO says that most of this increase is due to the new higher benefits mandated by the government. Premiums would also increase because of the older, sicker workers that lose their group coverage and are then added to the pool of non-group policyholders, thus increasing premiums for everyone in that group.

In contrast, CBO also found that due to the individual mandate, many younger, healthier people would now purchase insurance on the non-group market. About one-third of the non-group market in 2016 would be uninsured under current law. CBO considers these individuals to be much younger and healthier than the rest of the non-group market and would help offset other premium increases. CBO notes that these younger workers are forced to pay much more to pay for the health benefits of older workers.

The CBO’s study places a lot of emphasis on the mandates and penalties to force these younger workers to purchase health insurance. If they do not, then the non-group market would be a disaster as it would consist of people who would be sicker and older than average. As a consequence, they would face spiraling premiums to cover their additional costs.

The CBO also expects that one-fifth of health insurance plans on the group market would be subject to the excise tax of 40%. This is one of the highest tax rates on the books, even higher than the tax rate the richest Americans pay on their income. CBO estimates that more and more people would be forced to pay the excise tax over time due to the fact that health care premiums grows faster than Senator Reid’s exemption.

Now comes the House-passed health-care “reform” bill that, amazingly, would extract more subsidies from the young. It mandates that health insurance premiums for older Americans be no more than twice the level of that for younger Americans. That’s much less than the actual health spending gap between young and old. Spending for those age 60 to 64 is four to five times greater than those 18 to 24. So, the young would overpay for insurance that — under the House bill — people must buy: Twenty- and thirtysomethings would subsidize premiums for fifty-and sixtysomethings. (Those 65 and over receive Medicare.)
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Although premium changes would apply mainly to people using insurance “exchanges,” the differences would be substantial. A single person 55 to 64 might save $3,490, estimates an Urban Institute study. By contrast, single people in their 20s and early 30s might pay about $600 to $1,100 more. For the young, the extra cost might be larger, says economist Diana Furchtgott-Roth of the Hudson Institute, because the House bill would require them to purchase fairly generous insurance plans rather than cheaper catastrophic coverage that might better suit their needs.

Whatever the added burden, it would darken the young’s already poor economic prospects. Unemployment among 16- to 24-year-olds is 19 percent. Peter Orszag, director of the Office of Management and Budget, notes on his blog that high joblessness depresses young workers’ wages and that the adverse effect — though diminishing — “is still statistically significant 15 years later.” Lost wages over 20 years could total $100,000. Orszag doesn’t mention that health-care “reform” might compound the loss.

Samuelson also goes after the AARP, so read the whole thing, here.

As we’ve noted before, the young are not the only losers under Obamacare. Particularly the poor and small businesses take a heavy hit too.

As we mentioned this morning, nobody believes that Congress will follow through on the health care spending cuts used to help pay for the Reid Health Bill. At NRO, Ethics and Public Policy Center fellow James Capretta combs through the CBO report and delivers a true price tag for the Reid Bill:

So, here’s the bottom line. On paper, the Reid plan plus the “doc fix” would increase total federal spending by about $4.9 trillion over 20 years. Senate Democrats would resort to bracket creep and other tax hikes to raise $2.2 trillion over the same period. The balance would be made up with spending reductions, mainly in Medicare, that no one believes can be sustained, and in any event do not constitute “health reform.” In other words, it’s a tax-and-spend bill of the highest order. And only the spending is certain to happen.

To put it charitably, the truth is more complicated. The bill depends on budget gimmicks and unrealistic assumptions and projected savings to reach this goal over the 10 year budget window.

Consider the four most outrageous “Budget Tricks”. By its construction, the bill:

• Excludes the Costly “Doctor Fix”. Like the House bill, the Senate bill conveniently ignores the over $200 billion price tag associated with stopping the unavoidable cuts to physicians under the Medicare program. Separating the health care bill like this enables Senator Reid to claim his bill will reduce the deficit. However, in a letter released today, CBO estimates that combining the House bill (H.R. 3961) with the “Dr. Fix” bill (H.R. 3962) would actually “add $89 billion to budget deficits over the 2010–2019 period.”
• Manipulates the new CLASS Act. The Senate bill, like the House, also includes a new government health care program for long term health insurance, the CLASS Act. The structure of the CLASS Act has premium collections raising revenues for the government in the first 10 years, appearing to aid in reducing the deficit. But the CBO points out that while the CLASS Act would generate net receipts for the government in the initial years when premiums would exceed total benefit payments, but would eventually lead to net outlays when benefits exceed premiums.”
• Delays Costly Benefits. The Senate bill is cleverly designed to gather revenues (higher taxes, fees, and other offsets) over the full 10 year window but delays paying out the major benefits, like subsidies, until the last 6 years. So, the 2010-2019 estimate is not a full cost estimate of all provisions fully implemented and will certainly add significantly to the true cost of the bill. Moreover, as with all government programs, they always cost more than originally promised.
• Depends on Uncertain Cuts to Medicare. The Senate bill depends on using cuts to Medicare to pay for its $1.2 Trillion coverage expansion. As explained by the CBO Director:
  

  Adjusting for inflation, Medicare spending per beneficiary under the bill would increase at an average annual rate of roughly 2 percent during the next two decades—much less than the roughly 4 percent annual growth rate of the past two decades.

  These dramatic savings, of course, assume that these spending cuts stay intact. If the “Dr. Fix” is an illustration, it is highly unlikely that Congress will live up to the deep cuts it proposes for Medicare. As the first round of cuts get close, a frenzied team of high powered lobbyists for the health care industry will no doubt be wearing out shoe leather going door to door in the corridors of Congress. They’ve been successful just about every time.

  Moreover, these cuts include over $118 billion in ‘savings’ resulting from changes to the highly popular Medicare Advantage plans, a move that will directly impact the benefits of millions of seniors. In his analysis of the House bill, where the House of Representatives enacted similar reductions, the Chief Actuary for the Centers of Medicare and Medicaid Services has confirmed, these changes will result in “less generous packages” and enrollment “would decrease by about 64 percent.”

True Costs Unknown
The reality is this Senate bill, like its House counterpart, costs far more than the President’s $900 billion promise and is more likely to run in the trillions. How is it that a bill whose purpose is to save money starts out, with careful caveats and unrealistic assumptions, by spending nearly a trillion dollars?

The five major flaws of both the Pelosi and Reid Bills are:

1. A New Public Plan. Both the House and Senate bills would create a new government-run health care plan — a so-called public plan — intended to “compete” with private insurers in a new health insurance exchange. The result: widespread erosion of private insurance and substantial consolidation of federal control over health care through the exchange. Congress is incapable of guaranteeing the American people a level playing field for competition between the government plans and private health plans. As the Centers for Medicare and Medicaid Services has recently certified, what many have already concluded, millions of Americans will lose their existing employer-based coverage.

2. Federal Regulation of Health Insurance. Both the House and Senate bills would result in sweeping and complex federal regulation of health insurance that will create a one-size-fits-all federal health plan that will drive up (not down, as promised by the President) the cost of everyone’s health insurance premiums.

3. Massive Expansion of Medicaid and New Taxpayer-Funded Subsidies. Both the House and Senate would dramatically expand eligibility for Medicaid and extend generous taxpayer-funded subsidies to the middle class. Combined, such commitments are the biggest cost items in the bills would result in scores of Americans dependent on the government to finance their health care.

4. Employer Mandates. Both the House and Senate bills would impose an employer mandate for employers who do not offer coverage and for those whose benefits do not meet a new federal standard. An employer mandate would hurt low-income workers and would stifle much-needed economic growth. Our country does not need a job killing employment tax at a time of 10.2% unemployment.

5. Individual Mandates. Both the House and Senate bills would require all people to buy health insurance. Those individuals who do not purchase government qualified health care coverage would be subject to new tax penalties and in comes cases jail time.

Finally, don’t be fooled by the reported cost estimates. The Senate and House bills use budget gimmicks and unrealistic savings to make their proposals fit under the $900 billion limit put forth by the President. As history has proven, government health care programs end up costing much more than first promised.

We will be posting more in depth analyses as our analysts read through the bill, so stay tuned. Majority Leader Reid is promising the first vote on his health bill this Saturday. With that in mind, the Dean of Harvard Medical School, Dr. Jeffrey Flier, wrote in the Wall Street Journal yesterday:

So the majority of our representatives may congratulate themselves on reducing the number of uninsured, while quietly understanding this can only be the first step of a multiyear process to more drastically change the organization and funding of health care in America. I have met many people for whom this strategy is conscious and explicit.

We should not be making public policy in such a crucial area by keeping the electorate ignorant of the actual road ahead.