Useful Idiots Grasping At Straws

The left-wing has got­ten excited by the Coun­cil of Eco­nomic Advis­ers Pre­dict­ing that Health Care Reform Will Reduce Costs. Only a use­ful idiot would believe this.

Cato Institute’s Michael D. Tan­ner eas­ily debunks this B.S.:

Health Care Reform Will Increase Costs

There’s an old Yid­dish say­ing that, “If my bubba had wheels she’d be a trol­ley.” So goes the logic of the Obama admin­is­tra­tion in their paper released yes­ter­day, “The Eco­nomic Case for Health Care Reform.” Their claim is that reduc­ing health care costs would help the econ­omy. Yes, if health care costs were reduced it would likely help the econ­omy, though we should remem­ber that the health care indus­try is part of the economy.

There is noth­ing in Oba­macare, how­ever, that will reduce costs. In fact, expand­ing cov­er­age may cause costs to rise. One study by MIT’s Amy Finkel­stein sug­gests that the preva­lence of insur­ance itself has roughly dou­bled the cost of health care. So, if Obama suc­ceeds in expand­ing insur­ance cov­er­age, it’s very likely to increase the cost of care.

Take Mass­a­chu­setts for exam­ple. Three years ago, Mass­a­chu­setts gov­er­nor Mitt Rom­ney signed into law one of the most far-reaching exper­i­ments in health care reform since Pres­i­dent Bill Clinton’s ill-fated attempt at national health care. Pro­po­nents promised the reforms would reduce health care costs, sug­gest­ing the price of indi­vid­ual insur­ance poli­cies would be reduced by 25–40 per­cent. In real­ity, how­ever, insur­ance pre­mi­ums rose by 7.4 per­cent in 2007, 8–12 per­cent in 2008, and are expected to rise 9 per­cent this year. This is com­pared to a nation­wide aver­age increase of 5.7 per­cent over the same three years. Nation­ally, on aver­age, health insur­ance for a fam­ily of four costs $12,700; in Mass­a­chu­setts, cov­er­age for the same fam­ily costs an aver­age of $16,897.

In fact, since the bill was signed, health care spend­ing in the state has increased by 23 per­cent. Thus, despite indi­vid­ual and employer man­dates, the cre­ation of an insur­ance con­nec­tor and other mea­sures that increase insur­ance reg­u­la­tions, Mass­a­chu­setts has failed to bring costs down.

Pres­i­dent Obama and Con­gres­sional lead­ers have endorsed expand­ing cov­er­age in sim­i­lar ways to Mass­a­chu­setts. The pro­pos­als would undoubt­edly make it eas­ier for some peo­ple to get cov­er­age, but would also raise insur­ance costs for the young and healthy, mak­ing it more likely they would go with­out cov­er­age. This leaves two choices: revert to the indi­vid­ual man­date (Pres­i­dent Obama opposed the man­date as a can­di­date) or increase sub­si­dies to try to cut costs to young and healthy indi­vid­u­als, thereby adding to the already sub­stan­tial cost of the pro­posed plans.

Ulti­mately, con­trol­ling costs requires some­one to say “no,” whether the gov­ern­ment (as in single-payer sys­tems with global bud­gets), insur­ers (man­aged care) or health care con­sumers them­selves (by desire or abil­ity to pay). In real­ity, any health care reform will have to con­front the fact that the biggest sin­gle rea­son costs keep ris­ing is that the Amer­i­can peo­ple keep buy­ing more and more health care. (The Eco­nomic Case for Health Care Reform).

Use­ful Idiots either buy or enable the Enron-esque bud­get gim­micks the Sen­ate is using to make the case that big­ger gov­ern­ment health care reform will actu­ally reduce costs:

It will only cost $848 bil­lion. It is true that the CBO offi­cially scored the bill as cost­ing $848 bil­lion. But much of the spend­ing is back-loaded. The bill doesn’t start spend­ing until 2014, and only costs $9 bil­lion that year. By 2019, the annual cost hits $196 bil­lion. The minor­ity staff of the Sen­ate Bud­get Com­mit­tee reports the cost is closer to $2.5 tril­lion over 10 years once all bud­get gim­micks are fac­tored out. If you include costs shifted to indi­vid­u­als, busi­nesses and state gov­ern­ments, the price tag could top $6 trillion.

It will reduce the bud­get deficit. The CBO does say that the bill would reduce the deficit by $130 bil­lion over the next 10 years (which is less than the deficit the gov­ern­ment ran last month alone). How­ever, even that tiny sav­ings depends on bud­get gim­micks and the will­ing­ness of future Con­gresses to make huge cuts in Medicare spend­ing. In fact, the CBO makes it clear that it will be “dif­fi­cult” to achieve the pre­dicted sav­ings. (Five Health Reform Whop­pers).

The use­ful idiot left-wing blog­sphere will buy the idea that heath care reform will reduce busi­ness costs but the peo­ple who actu­ally run busi­nesses know better:

Pres­i­dent Barack Obama’s $1 tril­lion health-care over­haul won’t buy cor­po­rate Amer­ica relief from med­ical costs that more than dou­bled in the last decade, chief exec­u­tive offi­cers of more than a dozen U.S. com­pa­nies said.

Pri­vate com­pa­nies, providers of ben­e­fits to 132 mil­lion Amer­i­cans, will see lit­tle sav­ings from leg­is­la­tion under debate in Con­gress, CEOs at United Par­cel Ser­vice Inc., Safe­way Inc. and Ver­i­zon Com­mu­ni­ca­tions Inc. said in inter­views over the past two weeks. The mea­sures are more likely to add expenses, through taxes and fees on employ­ers who don’t offer afford­able cov­er­age, said Ellen Kull­man, chief of Wilm­ing­ton, Delaware-based DuPont Co., the world’s third-largest chem­i­cal maker.

“They’re dis­as­ters,” said John Ric­c­i­tiello, CEO of Elec­tronic Arts Inc., of Red­wood City, Cal­i­for­nia, the sec­ond– largest video-game maker with 8,000 employ­ees. “What part of either the House or Sen­ate bill is going to do any­thing with cost? I don’t see anything.”

U.S. com­pa­nies spent $400 bil­lion on employee health care in 2007, a five­fold increase over two decades, accord­ing to the Employee Ben­e­fit Research Insti­tute in Wash­ing­ton, D.C. At its present rate, the num­ber will near $830 bil­lion by 2017. (‘Dis­as­ter’ Health Plan Breaks Obama Cost-Cut Vow).

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Bet­ter, more afford­able health care requires free-market reforms: the free­dom to pur­chase health plans across state lines; tax reforms like “large” health sav­ings accounts; mak­ing health insur­ance portable, con­trolled by the indi­vid­ual rather than gov­ern­ment or an employer; mak­ing med­ical licenses portable, and more.

To read more about real solu­tions to the prob­lem of ris­ing heath care costs, see:

Pro-market Alter­na­tives to Demo­c­ra­tic Health Care Reform

See also:

• Why Isn’t Gov­ern­ment Health Care the Answer?
• What Should Be Done?
• FAQ: Consumer-Directed Health Care

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Tagged as: Health Care Costs