Healthcare Part 3/6

So, what will this do to our deficit?

Well, the Congressional Budget Office estimates that the deficit will be reduced by $138 billion over the course of the next 10 years, and nearly a trillion dollars over the next 20 years.

That sounds like a great thing, right? Yeah! Except.. it's a fallacy. With the assumptions they had to make about the bill, even they have said that their number's need to be taken with a grain of salt. As former CBO Director Rudolph Penner said, "Any CBO estimate involving human behavior and social programs is very hard to figure."

Assumptions aside for a second, just the time frame for this estimation throws it into question. We're talking about 10-20 years into the future. You have no idea what congress will choose to do (or add) in the meantime, and you have no idea what conditions will be like in 20 years.

Now on to the assumptions. In the current bill (the one the CBO scored), you have this so-called "Cadillac Tax", which taxes high end insurance plans. First of all, it's not set to kick in until 2018 (accounting for 12 years of the trillion) - if it stays in. The labor unions have balked at the idea, so it may end up being scrapped, raising the price of the bill. But the CBO has to score what it has in front of it. It can't make assumptions about what congress will end up doing. It can't operate under the assumption that congress will scrap it's own legislation.

The bill also includes cuts to the Medicare and Medicaid programs of $500 billion. Also included in the bill are 21% pay cuts to doctors. These are not likely to go through. In fact, there is likely to be a separate "Doctor Fix" bill that will compensate doctors so they can keep taking Medicare and Medicaid (originally cut from this bill).

Even after all of this, most benefits don't kick in until 2014 - but don't worry, taxes kick in immediately. 10 years of taxes for 6 years of benefits.