ObamaCare's Health Grant Boondoggle


The latest long-term budget outlook from the Congressional Budget Office is extremely clear about the fact that the single biggest challenge to the nation's fiscal future is the growth of health spending, primarily within Medicare and Medicaid. (More on the CBO's report later.) What an editorial in today's Wall Street Journal makes clear is that the Department of Health and Health and Human Services, which runs the Centers for Medicare and Medicaid Services, is an unbelievably poor steward of these programs and the massive amounts of taxpayer-funded spending they entail:

HHS already makes more grants than all other agencies combined, and it is the purchaser of health care for about one of three Americans via Medicare, Medicaid or both. The problem is that HHS spends its money—$788 billion for entitlements in 2012 and another $78 billion to run HHS's 300-odd programs—so badly.

Ernst & Young's annual outside audit of the HHS balance sheet last November was considered a triumph because several material weaknesses were downgraded merely to significant deficiencies. But on a "day-to-day or even monthly basis" HHS cannot accurately track its spending, according to the audit. The agency is in violation of numerous federal accounting rules written specifically for the bureaucracy, to say nothing of the financial reporting required of public companies.

The HHS inspector general revealed this year that his team can barely monitor HHS because its staff is too busy chasing the criminals exploiting HHS's incompetence. Experts disagree about how much is stolen from taxpayers through entitlement fraud—the Government Accountability Office puts it at $48 billion annually—but one sign of the problem is that Medicare allows doctors (or "doctors") to register for billing privileges as "other."

One particular ObamaCare boondoggle that needs fly-specking is the HHS decision to finance nonprofit insurance companies with up to $7.25 billion in ultra-low-cost loans. These co-ops were a consolation prize for liberals after Democratic opposition killed the government-run public option, and the co-ops are supposed to be managed by and for consumers. But it turns out that running an insurance company is hard for amateurs who can't attract private financing.

HHS officially estimates that the default rate on the loans will hit between 35% and 40%, which would be bad enough. But White House budget documents show that HHS expects to lose $3.1 billion of the $3.4 billion appropriated so far—which implies a default rate of 91%. 

In a related piece, Steven Greer, who worked briefly with the new Medicare innovation center created by ObamaCare, details the waste and inefficiency at the center, which is expected to make $10 billion grants over the next decade, and calls for it to be abolished.

NEXT: Reminder: Unaffordable Public Sector Pensions Are Also on the Ballot Today in the Scott Walker-Free State of California

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  1. I havent read the article but couldnt resist saying that anytime I see the word ‘obama’ in a sentence, I think the chances are pretty high that the word ‘boondoggle’ is also going to appear in it.

  2. “Experts disagree about how much is stolen from taxpayers”

    Easy. All of it.

  3. A little math for you.

    HHS currently spends around $800mm/year on health care entitlements. The growth rate of its health care spending historically has been over 10%, meaning it doubles every seven years (or less). Recently, its dropped to “only” about 7%, meaning that it will double every 10 years. Of course, the baby boomers haven’t really started sucking on the Medicare teat yet, so I don’t expect that reduction to last.

    Total federal tax receipts in 2012 are estimated to be $2.5T. Medicare/Medicaid already consumes 1/3 of those receipts. In 7-10 years, it will consume 2/3 of those receipts, and within a few years after that, all of them.

    Even if you assume that tax receipts grow at a generous 3% per year, Medicare and Medicaid will consume all federal taxes by approximately the year 2025.

    1. and that is a cheery bit of news – hurray socialism!

      Now where did I put my passport?

      1. I hope its in your bugout bag, next to the spare box of ammo.

        1. What good would a passport from a future failed state do when the SHTF?

          I’m reminded of a story my wife told me about how her aunt dragged a footlocker full of Laotian money with her when fleeing the Pathet Lao after the fall of the royalists. The minute she crossed the Mekong into Thailand, the money was useless. However, my wife did teach herself to read Laotian by playing with the bills when she was a kid. When her aunt died, they burnt the money with her. Hopefully, Heaven has a money exchange.

    2. “Giving money and power to government is like giving whiskey and car keys to teenage boys.”
      -P.J. O’Rourke

      So RC, you are saying there is an inevitable crash coming? I am sure it will be characterized by the pundits and political class as ‘unexpected’.

      When the welfare spigot finally runs dry I fully expect our country to quickly come to resemble the world of Mad Max.

      1. When the welfare spigot finally runs dry I fully expect our country to quickly come to resemble the world of Mad Max.

        Hopefully, you’re prepping.

        1. I have had at least a dozen people jokingly tell me “Suthenboy, when the shit hits the fan, I am coming to your house”.

          When the SHTF I dont think it will be a joke anymore. Were such a thing happen, I fully expect them to show up, kids in tow.

          1. That’s why I tell almost no one about my preparations. Unless someone wants to join my prep group.

            1. I have a bug-out location, deep in the woods of Michigan. A small stock of food and even an escape hatch in another country if things get really bad.

              1. I think when that happens the average Canadian would hunt any Americans crossing the border and send them back with glee written all over their smug, sanctimonious faces.

          2. Neighbor: “Suthenboy, when the shit hits the fan, I am coming to your house”.

            Suthenboy: “Come right ahead. Be sure to bring shelter, tools, clothes, and anything you plan on eating while you’re here.”

      2. I’m ready: I’ve already stored up a nice supply of hockey masks.

      3. So RC, you are saying there is an inevitable crash coming?

        Its not inevitable.

        All we need to do is replace our current ruling class, pretty much in toto, with people who will stop at nothing to reduce the federal budget to what can be paid with current tax receipts.

        Oh, and within the next few years.

        And re-elect them even though the cuts will inflict an enormous amount of pain.

        That’s all.

        1. or else stratospheric tax raises (er, revenue enhancements to use the modern term). The bar for being “rich” will be lowered enough to bite heavily into the middle-class. VAT taxes, etc etc etc. A constant drip-drip of fees, taxes, and other trickery will be used to try to keep the lumbering beast alive. Hell, look at Britain and then add in a dose of Argentina.

          And so ends the noble experiment.

          1. Speaking of Preppers and Argentina, I recommend the blog The Modern Survivalist. Having lived through the Argentine collapse, the author has a good insight as to what urban folks will be in for when the economy collapses in the States.

          2. or else stratospheric tax raises (er, revenue enhancements to use the modern term).

            Won’t twitch the needle. Historically, the fedgov can’t raise more than 18% of GDP on a consistent basis. If they bump receipts up from the current level of about 16% to 18%, that would be another $265BB in tax revenue.

            Even assuming no dynamic effects, that would push out the drop dead date by maybe 3 years.

            1. oh, they will try to get more revenue in… and that’s where most of the nasties will come.

    3. Your math frightens and confuses me.

    4. I would insert yet another Iron Law here, but I don’t have the time and inclination to argue.

      Competency/Language exam, VISA approval, and November cannot get here soon enough.

  4. I would recommend this health insurance plan i found through “Penny Health” to anyone with a growing family who is looking to minimize their medical expenses.

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