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Author Topic: Curing the budget deficit
flydye
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From Greg Mankiw

quote:

I have a plan to reduce the budget deficit. The essence of the plan is the federal government writing me a check for $1 billion. The plan will be financed by $3 billion of tax increases. According to my back-of-the envelope calculations, giving me that $1 billion will reduce the budget deficit by $2 billion.

Now, you may be tempted to say that giving me that $1 billion will not really reduce the budget deficit. Rather, you might say, it is the tax increases, which have nothing to do with my handout, that are reducing the budget deficit. But if you are tempted by that kind of sloppy thinking, you have not been following the debate over healthcare reform.

Healthcare reform, its advocates tell us, is fiscal reform. The healthcare reform bill passed last year increased government spending to cover the uninsured, but it also reduced the budget deficit by increasing various taxes as well. Because of this bill, the advocates say, the federal government is on a sounder fiscal footing. Repealing it, they say, would make the budget deficit worse.

So, by that logic, giving me $1 billion is fiscal reform as well. To be honest, I don’t really need the money. But if I can help promote long-term fiscal sustainability, I am ready to do my part.


As a Conservative, I offer to reduce the budget deficit by $2 billion with only $2.1 billion in tax increases...since I love my country.
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LetterRip
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If we have x dollars of spending that the federal government ends up spending due to the uninsured (through higher medicaid and medicare spending down the line and various other matters), or pass a bill that ends up getting the same health issues handled at a point when they are cheaper, then all else being equal there should be a net savings over the long term.

So it is in fact not the same logic at all.

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LetterRip
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Don't you get tired of presenting such silly arguments?

It makes you appear either gullible and not able to give critical thought to arguments that justify the end you desire, or deceitful and willing to present arguments that you are aware are suspect in the hopes of convincing gullible people to support the end you desire.

Either way it doesn't reflect well upon you.

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flydye
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Of course, that assumes that your plan works as advertised. That is a big assumption to make if the early results are any indication.

But your opinion of me is critical to my self esteem. Please, tell me more...

[ January 21, 2011, 09:48 PM: Message edited by: flydye ]

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LetterRip
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flydye,

if you find the actual arguments and claims being made unconvincing that is fine. It is using of strawmen that I object to and that reflects poorly upon you.

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flydye
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Hmm. The healthcare bill raises $438 billion in extra revenue.

The most common claim is that it cuts the deficit $210 billion.

Lesse...438-210= $228 billion in...whatever.

So the cost of the magical stuff in the bill seems to be $228 billion, not $438 billion IF we believe it (no, I don't)

Now you may argue that you are spending $438B in 'investments' etc which will reduce our costs later, but this is akin to me saying I'm going to take my paycheck, invest it in pets.com and make enough to retire. Maybe yes, and maybe no.

So you are spending $438B on a hypothetical.

Even assuming that all you believe is true, you are charging twice amount of money for deficit reduction...and trying to sell it that way. You will gladly pay for half a hamburger Tuesday for a hamburger today.


Additionally, this is false messaging. As noted by the simple math: you can reduce the deficit by that amount a lot more cheaply.

This also hits the line of attack that 'repealing Obamacare will INCREASE the deficit'. Well, no, not really. It puts us where we already were. That bit of lying assumes that there would be that $210 billion savings...which costs $438 billion to accomplish. Cheap at twice the price...

[ January 22, 2011, 10:46 AM: Message edited by: flydye ]

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Pyrtolin
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quote:
Additionally, this is false messaging. As noted by the simple math: you can reduce the deficit by that amount a lot more cheaply.
Well, sure. That's like saying you could save a lot of money by never eating again, though. Starving to death does wonders in cutting your future costs.

There are plenty of penny-wise pound-foolish ways to adjust government spending that fundamentally ignore the fact that essential services are the first priority while the deficit is a boogeyman that's only invoked to try to scare people into supporting bad policies through false equivalences like comparing the budget of a government with its own currency to a personal or business budget.

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flydye
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False analogy.

Define 'essential'. Does 'essential' allow the government to demand a person enter into a business relationship with a third party Constitutionally? If so, what doesn't it allow?

And this is not a strawman or a false equivalence. It is a characterization that you would prefer not be made. One which may resonate and call into question the actual reasoning behind the law.

And like the Bush WMD claim, the Administration decided to sell Obamacare to a wider public then the Kossacks and the minority of self proclaimed Liberals by chatting up deficit reduction. Not the glories of universal healthcare. Well, live by the green eyeshade, die by the green eyeshade...

I envision that the administration, as more and more of healthcare's magical goodness seeps into the public, will soon be drowning in a sea of red ink. But that is a 'boogeyman', since you don't seem to care about actual cost containment

[ January 22, 2011, 08:16 PM: Message edited by: flydye ]

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Pyrtolin
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quote:
Does 'essential' allow the government to demand a person enter into a business relationship with a third party Constitutionally?
That's pretty much one of the defining sapext of commerce, and the only debate when President Washington signed a law that did just that was over whether people should be subsidized if they couldn't afford to purchase all of the required equipment.

The Constitution allows Congress to act as a legislative body and make the laws that it deems necessary to govern. Do you think that the Heritage foundation was so sloppy when they first proposed the mandate nearly 20 years ago that they didn't make sure that it was fully within bounds?

That said, I'd be happy to toss the mandate in favor of a single payer system, given that health care is one of the areas where market based solutions will always come up short because it's, by definition, impossible to eliminate the externalities and need for services has absolutely no relationship to ability to pay.

quote:
And this is not a strawman or a false equivalence.
Any time you try to pretend that federal debt means even remotely the same thing as private debt, you create a false equivalence. Money is a product on the government, "debt" to it is just bookkeeping for how much has been produced; forcing it to pay off the debt completely would be like trying to force Ford to make sure to balance its budget by reclaiming every car it has ever produced.

There are times to worry about the production of money- those times are when the market is starting to become flooded with it and things can't be produced fast enough to spend it on; that's not even remotely the economic state we're in right now.

quote:
And like the Bush WMD claim, the Administration decided to sell Obamacare to a wider public then the Kossacks and the minority of self proclaimed Liberals by chatting up deficit reduction.
No, that was to follow the paygo policy guidelines that they set down for all general legislation, it had little to do with selling it aside from belying the claims that it would cost too much. And the actual savings are severely under-balled because the CBO couldn't score any of the cost containment measures because they didn't have enough data to project how effective they would be.

quote:
But that is a 'boogeyman', since you don't seem to care about actual cost containment
Nice try on the conflation there, but "health care cost containment" and "federal deficit" are two completely separate things.

You don't have to look farther than Medicare D, passed without even a nod toward funding, for seeing how harping on the deficit in no more than grandstanding for support to cut programs that the person harping about it doesn't like. As soon as it's something they want to pass, the deficit becomes a non-issue.

The federal deficit needs to be sized to match the rate of population growth and needed economic expansion to meet the needs of our current population as well as the growth.

Healthcare costs, on the other hand are consuming far to much of the economy, and absolutely do need to be brought under control so that they stop effectively stagnating, if not outright stealing wages.

Healthcare costs are money out of people's pockets; they need to be controlled. The deficit is a measure of the rate at which money is being printed, it only need to be controlled when there's too much money for the current economy.

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flydye
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Point: I never supported Medicare Part D, nor did a large number of Conservatives.
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flydye
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"As soon as it's something they want to pass, the deficit becomes a non-issue."

Yes...funny that.

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flydye
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Excuse me, REALLY? I specifically recall Obama linking healthcare cost containment and the federal deficit in MANY of his hundreds of speeches on the issue.

Now, you may have this odd idea that the government can create money at whim for whatever it deems essential, but as sold, what people heard and supposedly bought into (though strangely never a majority for the total package...even today) was that of deficit reduction...and that is ALSO the argument that is being trotted out to forestall it's repeal.

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TomDavidson
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quote:
what people heard and supposedly bought into (though strangely never a majority for the total package...even today) was that of deficit reduction
I doubt that 1 person out of five, if asked the goal of Obama's healthcare plan, would say "deficit reduction."
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flydye
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Here's One

quote:
“This represents the biggest deficit reduction plan since the 1990s,” Obama said. “Now there has been a lot of talk about deficits lately and rightly so. These numbers keep me up at night
Here's Two

quote:
60 Senators voted to pass historic reform that will make health insurance more affordable, make health insurance companies more accountable and reduce our deficit by roughly a trillion dollars.
Here's Three

quote:
House Speaker Nancy Pelosi (D-CA) says the conglomerated House health care reform bill--rolled out today at a news conference outside the Capitol--will be deficit neutral, a key qualification for getting moderates on board.

"The bill is fiscally sound, will not add one dime to the deficit," Pelosi proclaimed.


The bill features a public option that lets doctors negotiate their payment rates, a step back from liberals' preferred policy of pegging reimbursement rates to those used in Medicare.

It will reduce the deficit by $30 billion over the first ten years of its enactment, according to a fact sheet released by the Speaker's office based on preliminary analysis by the Congressional Budget Office.


Here's Four

quote:
Senator Dianne Feinstein is reluctant when it comes to President Obama's health care reform. As reported by NBC Bay Area, the main sticking point is cost and the program's effect on the country's deficit. Senator Feinstein is quick to go on record that health care reform is much needed - a sentiment with which I most heartily agree - but that she won't be able to completely back the president until there is a clear plan for financing, which does not further put the country into a hole. 58% of readers seem to agree with her stance.


Five

quote:
“Any solution to our long-run budget problem will simply have to include slowing the growth rate of health care costs,” said Christina Romer of the Council of Economic Advisors at a CAP event last Monday on how the government can reduce the national deficit while improving health care coverage.


And one Apostate...

quote:
WASHINGTON, July 19 (UPI) -- U.S. healthcare reform will be "deficit-neutral" and the chances it can be delivered by August are "high," the White House budget director says.

Peter Orszag, director of the Office of Management and Budget, appearing on "Fox News Sunday," reaffirmed President Barack Obama's contention that his healthcare reform package won't add to the budgetary red ink, but declined to make a firm prediction it will emerge from Congress by August.


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flydye
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I would agree with Tom. The 80% of the population who was happy with their health insurance would have quite a few questions about the goal of Obamacare...and wonder why it needed to be done in such a frantic hurry!
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DonaldD
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quote:
and wonder why it needed to be done in such a frantic hurry!
What, as opposed to waiting another decade or more (as history would suggest) before the democrats once again had the presidency and the now required super-majorities in both chambers?

And in another vein, do you really think that getting the most challenging legislation passed early in an administration's mandate is so surprising?

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Pyrtolin
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Not one of those show that they intent of the reforms were to reduce the deficit, only that mollifying concerns about the deficit informed the way they were implemented.

No one is saying "We're going to reduce the deficit and use health care reform as the way to do it." They're saying "We're trying to reform health care, but will make sure that that the plan does not increase the deficit."

Deficit reduction was a secondary characteristic, never a primary selling point.

quote:
Originally posted by flydye:
Here's One

quote:
“This represents the biggest deficit reduction plan since the 1990s,” Obama said. “Now there has been a lot of talk about deficits lately and rightly so. These numbers keep me up at night
Here's Two

quote:
60 Senators voted to pass historic reform that will make health insurance more affordable, make health insurance companies more accountable and reduce our deficit by roughly a trillion dollars.
Here's Three

quote:
House Speaker Nancy Pelosi (D-CA) says the conglomerated House health care reform bill--rolled out today at a news conference outside the Capitol--will be deficit neutral, a key qualification for getting moderates on board.

"The bill is fiscally sound, will not add one dime to the deficit," Pelosi proclaimed.


The bill features a public option that lets doctors negotiate their payment rates, a step back from liberals' preferred policy of pegging reimbursement rates to those used in Medicare.

It will reduce the deficit by $30 billion over the first ten years of its enactment, according to a fact sheet released by the Speaker's office based on preliminary analysis by the Congressional Budget Office.


Here's Four

quote:
Senator Dianne Feinstein is reluctant when it comes to President Obama's health care reform. As reported by NBC Bay Area, the main sticking point is cost and the program's effect on the country's deficit. Senator Feinstein is quick to go on record that health care reform is much needed - a sentiment with which I most heartily agree - but that she won't be able to completely back the president until there is a clear plan for financing, which does not further put the country into a hole. 58% of readers seem to agree with her stance.


Five

quote:
“Any solution to our long-run budget problem will simply have to include slowing the growth rate of health care costs,” said Christina Romer of the Council of Economic Advisors at a CAP event last Monday on how the government can reduce the national deficit while improving health care coverage.


And one Apostate...

quote:
WASHINGTON, July 19 (UPI) -- U.S. healthcare reform will be "deficit-neutral" and the chances it can be delivered by August are "high," the White House budget director says.

Peter Orszag, director of the Office of Management and Budget, appearing on "Fox News Sunday," reaffirmed President Barack Obama's contention that his healthcare reform package won't add to the budgetary red ink, but declined to make a firm prediction it will emerge from Congress by August.



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Pyrtolin
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quote:
Originally posted by flydye:
I would agree with Tom. The 80% of the population who was happy with their health insurance would have quite a few questions about the goal of Obamacare...and wonder why it needed to be done in such a frantic hurry!

You're citing an imaginary number. In the CNN poll that you're mis-citing

80% said they were satisfied with the care they received. Not their insurance, but their performance of their doctors.

75% were satisfied with the amount of coverage they had.

52% were happy with how much their coverage cost them.

75% were dissatisfied with the total cost of care in the US.

Only 50% were confident that no one in their household would lose coverage, and you get down to 29% that were confident that they could actually afford a major medical emergency.

http://www.cnn.com/2009/POLITICS/03/19/health.care.poll/index.html

And I'll bet you could make those numbers drop even further by showing people with employer based care (that is, the vast majority of them) what kind of raises they could have been getting if the money hadn't been being soaked up by skyrocketing premiums on the employer side.

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flydye
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But it's so much better that they get the raises (assuming that the employer actually, you know, GIVES them the raise)...but it's SO much better if it's taxed and fined away from them for government healthcare instead?
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TomDavidson
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quote:
The 80% of the population who was happy with their health insurance...
This is an invalid statistic, of course. Nor am I claiming that there's any correlation between happiness with one's current health insurance and a belief that the bill's primary purpose was deficit reduction.
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flydye
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But you sure as heck want to deny that there was a huge sales effort re deficit reduction because that would bolster the point.
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DonaldD
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bolster which point?
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TomDavidson
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I don't think there's a "huge sales effort" re: deficit reduction. I think they're trying to downplay the costs, and present them in the best possible light; that's why they stuffed the bill full of cuts, after all, and it's in the same spirit (even down to the likely accuracy of the budget projections) of the Republican proposal to require "deficit neutral" bills from Congress in the future. No big deal.
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Pyrtolin
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quote:
Originally posted by flydye:
But it's so much better that they get the raises (assuming that the employer actually, you know, GIVES them the raise)...but it's SO much better if it's taxed and fined away from them for government healthcare instead?

There was little "government healthcare", mostly in the extension of additional funding for clinics, in the bill. Heck, even the ability to choose government health insurance was dropped for most people with the scrapping of the public option and the Medicare buy-in compromise. Only the fixes to Medicaid to prevent states from continuing to passive-aggressively undermine it amount to an actual extension of government provided insurance.

Your claims of increased income taxes are also completely bogus, given that there were none in the proposal higher salaries would translate to additional tax revenue, but that's not in any way an actual tax rate increase; in fact most people affected would be seeing a net positive swing in income due to subsidies both for the cost of insurance plans and assistance in covering secondary costs like co-pays and deductibles without even getting into the benefits of competitive pool based pricing over the current divide and conquer approach.

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flydye
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You made the point that people weren't seeing raises due to increased healthcare costs.

I am simply pointing out that pulling it from the employer's pocket, your pocket, or the government pocket is irrelevant. Someone's paying for this. The magic money tree isn't suddenly dropping it's fruit to cover the cost.

But you bring up a great point. 'Subsidies' for all those people mean it's someone' else's pocket getting picked. What happens when you run out of other people's money?


*The elephant in the room is that tha major cost of healthcare is salaries. Not drugs, not insurance. And no one's touched that. The Doc Fix...isn't.

[ January 25, 2011, 08:41 AM: Message edited by: flydye ]

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flydye
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Tell me Tom. Do you believe that this law will come in under, or even just slightly over budget?
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TomDavidson
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Which law? You mean the entirety of the healthcare provisions? I can't even begin to offer an opinion, since I don't know which provisions will be gutted or culled by new leadership.
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flydye
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Very nice dodge. You are a tribute to your profession. Former profession.

[ January 25, 2011, 09:37 AM: Message edited by: flydye ]

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Pyrtolin
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quote:
Originally posted by flydye:
I am simply pointing out that pulling it from the employer's pocket, your pocket, or the government pocket is irrelevant. Someone's paying for this. The magic money tree isn't suddenly dropping it's fruit to cover the cost.


We're already paying for it, in about the most disorganized and inefficient way possible. We pay though higher rates at hospitals and direct government payments to hospitals to pick up the tab for the uninsured (who are being forced to take more expensive ER treatment over better avenues at that due to their lack of insurance. We're paying in huge amounts of lost productivity across the board where potential lifetime earnings are reduced by far more than the cost of care by the loss of hours, jobs, and even lives due to lack of said care when it's needed as well as a lack of provisions to ensure that people can get that care.

quote:
But you bring up a great point. 'Subsidies' for all those people mean it's someone' else's pocket getting picked. What happens when you run out of other people's money?
That's as false analogy as they come. Money is a public resource provided to promote economic function. It is created as needed to pay for government services; that's how it enters the economy in the first place across the board, be it printed at BEP, minted at the US Mint, or electronically asserted by the treasury an the Fed. Taxes serve much like control rods in a reactor, to absorb excess money out of the system and prevent the supply of money for exceeding the ability for the economy to produce goods to meet the supply.


quote:
*The elephant in the room is that tha major cost of healthcare is salaries. Not drugs, not insurance. And no one's touched that. The Doc Fix...isn't.
Salaries are static costs- you might have a better point there if doctors were paid per patient or hospitals paid for equipment based on the number of uses. If a doctor can see 10 people for a given period of time, but only 8 can afford to go to him, his effective per person rate is 25% higher to make up the shortfall. When you help those other two people afford to see him, his effective rate drops, given that he's seeing more people for the same pay. (Except of course in currently over-allocated areas like the ER which do pay significantly more- if you reduce traffic there such that you don't have to pay extra people to staff them, then you do implicitly cut overall salaries)

That's not to say that there aren't inflated costs, but there are absolutely measures in the health care reform to address those issues to some degree or another.

The use of exchange pricing and community rating work for the most purely market end of it, forcing the insurance companies to actually put pressure on providers to reduce such costs to lower their own costs, instead of the current system where they can freely pass them on to their captive customers, since adversarial pricing practices mean that switching to a different provider would cost even more than the hikes that they're seeing.

Bundled payment pilots would encourage insurance companies to pay once for the full reasonable cost of treatment and force the hospital to eat any overages it incurs if it over prices its services or otherwise performs poorly.

States could also step up and implement Maryland's system of precalculating what any given service should cost based on area and type of hospital, which has both completely stabilized care prices in the state and helped all of their hospitals become more profitable. Heck, for that matter, any state that doesn't want to implement the ACA exchange system should present its own plan for doing better and pressure Congress to make the innovation waivers available earlier.

There are many more such provisions- it's outright false to suggest that there no attempt is made to control costs, (which would eventually implicitly reduce salaries where they are too inflated) its just that the CBO refused to score such measures because there wan't nearly enough data to properly predict how well they wold work.

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Pyrtolin
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quote:
Originally posted by flydye:
Tell me Tom. Do you believe that this law will come in under, or even just slightly over budget?

If fully implemented and reasonably well managed, it will reduce per person health care costs significantly more than is currently projected. Short any kind of future economic collapse that would increase the number of people that need services without corresponding economic growth, any possible cost overruns will be more than compensated for by additional revenues from the resultant growth.
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TomDavidson
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It's not actually a dodge. I don't know how it will be implemented. I think the plan, if fully implemented, stands a good chance of reducing federal costs overall. However, I don't think for a moment that it'll be fully implemented, and I don't even know which provisions will make it into practice, so I can't begin to guess as to its final effect.
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flydye
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Pyrtolin, if we can't even start with an agreement on money, then there is nothing more to say.

[ January 25, 2011, 06:20 PM: Message edited by: flydye ]

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