“Fantasy in, fantasy out” is the way one leading economist has described the budgetary assumptions behind the new federal health care overhaul, which supposedly will reduce the projected federal deficit over the next 10 years even while creating two new federal entitlement programs.
But Barack Obama’s Washington has nothing on David Paterson’s Albany.
For example, Governor Paterson’s budget assumes the state can save $220 million over the next two years by reinstituting a form of price controls (known as “prior approval”) on private health insurance premiums. This, the governor’s supporting documents assert, will cut projected spending by “reducing the number of consumers with access to employer-based coverage that enroll in public health insurance programs.”
That estimate is dubious, to say the least. A business-sponsored study by the actuarial firm of Milliman Inc. estimated that the savings from prior approval would be minimal in 2010-11, and hundreds of millions below the governor’s projections for subsequent years.
Numbers aside, the dispute over prior approval exposes the foursquare wackiness of health care finance, New York style:
1. The state government heaps billions in taxes and costly coverage mandates on private coverage, inevitably resulting in
2. Higher health insurance premiums, leading state officials to complain that
3. Too many people are migrating from private coverage into publicly subsidized programs, like Medicaid’s Family Health Plus, which
4. The same officials have been steadily expanding, yet fret have grown too large.
In their “one-house” version of the budget, state Senate Democrats wisely rejected the governor’s health insurance price controls. But they also created $500 million in “resources” out of thin air by arbitrarily assuming that (a) Paterson’s Medicaid spending estimate is $300 million too high, and (b) his estimate of Medicaid fraud recoveries is $200 million too low.
Meanwhile, the state stands to lose billions in temporary federal “stimulus” funding for Medicaid starting next year. New York can be expected to join other states in pleading for more cash from the feds — which Congress and the Obama administration can provide only by blowing up their original health care budget estimates and adding to an already monstrous deficit.
For the taxpayers, the whole mess is shaping up as a bad dream.