Thursday, April 1, 2010

Will it help or hurt businesses? Part 1

There is a lot I could say about this one so I'm going to break this question up into two posts. Today I'll talk about what the white house and CBO are saying. Tomorrow I'll talk about what businesses are saying.

President Obama and the white house staff have said that businesses are going to come out way ahead with the health care legislation, here and here. The CBO says that the annual cost to business will "greatly exceed" $282 million, here. ( 2 x $141 million, $141 million is a limit set by Congress in the Unfunded Mandate Reform Act, which I'll talk more about in a later post. ) Of the three, President Obama is the only one to provide a specific number, $3,000 per employee.

President Obama got his information from the Business Roundtable, here. The Business Roundtable is a group of CEOs from leading US companies. The report they issued came out in November of last year. The legislation was not complete then, but many of the major ideas were already there. The basis of their argument ( page 7 ), is that if significant improvements are made in the delivery of health care, this bill will save a lot of money. If significant improvements are not made, then it will "only make the existing cost problems worse." They also say that a $3000 savings per employee is a best case scenario ( not the most likely scenario ).

The CBO estimate is not very specific, but they do say the opposite of what the Business Roundtable is saying. There are several important differences to note. The CBO report does not say anything about the costs to businesses after 5 years. It is possible for the legislation to have significant costs to businesses now and save them money in 10 years. The CBO report also contains estimates for the entire health care bill, including the reconciliation bill, estimating the cost of the original bill to greatly exceed $141 billion. The reconciliation bill contains many provisions that save the federal government money, but also many that cost businesses money. The CBO states that the cost of adding to the reconciliation to the original bill will also be much greater than $141 dollars (page 16). ( That brings their total estimate up to much greater than $282 billion dollars. ) The CBO also feels that the cost of this legislation will greatly depend on improving the delivery of health care.

The Conclusion
Who can we trust in such a situation? The Business Roundtable gives a best case guess. The CBO gives what they feel is most accurate (though quite vague). The one thing that the two agree on is that the bill must improve the delivery of health care to have a chance of saving anyone any money. It is also important to note that neither mentions just improvement, but both say significant improvement. If significant improvement doesn't happen, then everyone will be paying a lot more for health care in 10 years.

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