Veterans' Health Care Inflation Adjusted Costs To Rise By 45 To 75 Percent by 2020

From the CBO summary on the cost of veterans' health care:

The Congressional Budget Office (CBO) projects that the future costs for VA to treat enrolled veterans will be substantially higher (in inflation-adjusted dollars) than recent appropriations for that purpose, partly because more veterans are likely to seek care in the VA system but mostly because health care costs per enrolled veteran are projected to increase faster than the overall price level. Under two scenarios that CBO examined, the total real resources (in 2010 dollars) necessary to provide health care services to all veterans who seek treatment at VA would range from $69 billion to $85 billion in 2020, representing cumulative increases of roughly 45 percent to 75 percent since 2010.

Read the full 50 page CBO report, "Potential Costs of Veterans’ Health Care" here, on Scribd or embedded below.
Costs of Veterans' Health Care

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CBO Elmendorf: Presentation to Macroeconomic Advisers: Fiscal Policy Choices in Uncertain Times

From CBO Director Doug Elmendorf's presentation to Macroeconomic Advisers, "Fiscal Policy Choices in Uncertain Times" on September 16, 2010:

• The economic recovery will probably proceed at a modest pace—leaving total output well below its sustainable level, and the unemployment rate well above its sustainable level, for a number of years.


• In CBO’s judgment, the available monetary and fiscal tools, if applied at sufficient scale, would improve economic conditions during the next few years—though with costs and risks in the medium and long term. Policymakers need to address those trade-offs.


• To avoid worsening the medium-term and long-term imbalance between federal spending and revenue, any policies that widened budget deficits in the near term would need to be accompanied by specific polices to reduce spending or increase revenue over time.

Read the CBO director's complete presentation here or below.
Elmendorf Fiscal Policy Choices in Uncertain Times

Elmendorf Fiscal Policy Choices in Uncertain Times

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US Obesity Increases From 1987 to 2007 Raised Medical Costs By 3 Percent: Obesity Effect On Federal Budget Uncertain

The twenty year increase in US obesity from 1987 to 2007 accounted for a 3 percent increase in health care spending.

From the Congressional Budget Office summary report, "HOW DOES OBESITY IN ADULTS AFFECT SPENDING ON HEALTH CARE?":

A relatively simple set of calculations using survey data indicates that if the distribution of adults by weight between 1987 and 2007 had changed only to reflect demographic changes, such as the aging of the population, then health care spending per adult in 2007 would have been roughly 3 percent below the actual 2007 amount.

The overall effect of lowering obesity rates on total healthcare expenses and on the federal budget is not clear because of the added medical expenses and social security expenses due to the increased life expectancy.

CBO states:

How reducing obesity would affect both total (rather than per capita) spending for health care and the federal budget over time is less clear. To the extent that people, on average, lived longer because fewer individuals were obese, savings from lower per capita spending would be at least partially offset by additional expenditures for health care during those added years of life. Moreover, the impact on the federal budget would include not only changes in federal spending on health care but also changes in tax revenues and in spending for retirement programs such as Social Security, for which costs are directly tied to longevity. As a result, the net impact of reductions in obesity rates on national health care expenditures and on federal budget deficits would depend on the magnitude of those various effects.

Read CBO's summary report here.
CBO's full 12-page report is available here.

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Was CBO Pressured During The Health Care Debate To Hide Important Information From Congress?

[UPDATE: On September 14, 2010, Keith Hennessey retracted his post that CBO was pressured. See Hennessey's retraction "Retracting one of my CBO health care posts".]

Keith Hennessey thinks that the Congressional Budget Office was pressured to hide important information during the health care bill debate. CBO's recent data (PDF page 24, document page 6) shows that the new health care law will increase federal entitlement spending by $401 billion over the next decade, and will increase taxes by $525 billion over that same time period. Hennessey writes in his blog:

Based on CBO’s normal scoring practices and the intense scrutiny of both CBO and this legislation, this cannot possibly have been an oversight. I would bet heavily that CBO was pressured not to show this information.

If I’m right, CBO should have resisted this pressure and provided a picture that was both more complete and consistent with how they usually score legislation.

Deficits matter. So do spending and revenues. If they remain in place, these laws will make government spending $401 B larger this decade. By reducing the budget deficit through tax increases, these bills will shift some of the fiscal burden from the future to the present. By increasing government spending, these bills will increase the cost of government on the private sector that pays for it. That latter point is an important piece of information that Congress should have had when they voted.

I am generally a fan of CBO, and please don’t group me with the bashers who say they did everything wrong. This, however, was a failure.

Keith Hennessey served as Deputy Assistant to the President for Economic Policy and Deputy Director of the National Economic Council at the White House from August 2002 through the end of 2007. In 2008 and the first three weeks of 2009, he was Assistant to the President for Economic Policy and Director of the National Economic Council, a position now held by Dr. Larry Summers for President Obama.

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