November 8, 2009
The True Cost of ObamaCareBy James Simpson
The House of Representatives intends to ram its health care legislation through Congress. A mere week ago it revealed some of what it plans to do to our "health" with the latest iteration of ObamaCare. We can say only "some" because floor action will see new amendments added, and after that the bill must still be reconciled with the $2 trillion Senate abomination put out by Max Baucus's (D-MT) Finance Committee in October.
The Congressional Budget Office has estimated the 10-year (2010-2019) cost of the House Democrats' bill at $1.055 trillion. As usual, there is so much budget gimmickry in these estimates as to make them virtually meaningless.
The Democrats are dishonest on so many levels about this health care "reform" that it is almost impossible to untangle all of their lies. Let's start by clarifying some basic truths.
First, who pays for health care right now? That's right: the taxpayers, who foot the bill not only for their own health care, but for illegal immigrants, the poor, and seniors as well. (Some seniors continue to pay a premium for Medicare, but it still doesn't cover all the costs).
Who is feeling the pain of the rapid annual growth in health care costs that Democrats claim they so desperately to want to fix? Right: these same taxpayers.
Some will argue that employers pick up most of the tab. That is true when employers offer health care policies to their employees, but it is an illusion. Businesses must make a profit to remain alive, so every cost they pick up is passed on to the consumer via higher prices. So in reality, we pay.
Others will remind us that actually, employers don't pay the entire tab -- that offering health care benefits is a big plus for employers because they get subsidies from the government. Since health care benefits become part of a "compensation package," employers actually pay less (thanks to the government subsidy) than they would have to pay the employee otherwise.
True again. Employers don't pay the full cost of health care benefits; the government subsidizes them. But where does the government get the funds to subsidize employer-provided health care? From taxes or borrowing (which will require more taxes in the future to retire the debt). So who pays? Again, we pay -- now or in the future.
One of the primary causes of skyrocketing costs in health care is the low-cost or-no cost care available to low-income groups, including illegal immigrants. This creates an explosion in demand, not to mention immigration -- both legal and illegal -- by people who wish to take advantage of our low-cost, high-quality services. The government sometimes reimburses doctors and hospitals for the services they provide, but not always. Even when they do, the reimbursement is often and sometimes significantly below cost.
Who pays for all this? We pay! Twice!
We pay the taxes to cover the government reimbursements, and we pay in higher insurance premiums that result from doctors and hospitals trying to recoup their losses by passing them on in higher fees to private insurers. If this is not an option, they go out of business, reducing the availability of health care for everyone.
Who pays for that? We all do!
Now Reid, Pelosi, Baucus, et al proclaim that "We're from the government, and we're here to help!"
We have to ask:
"Haven't you done enough already?"
First, the notion that this bill is a deficit-reducer is a laughable fraud. They cost out the bill at $1.055 trillion. In and of itself, that should give anyone pause. Then they expect us to buy the same phony scoring they did on the Senate's Baucus bill.
They subtract out hundreds of billions of reimbursement cuts to doctors that experts agree will never happen. Indeed, this phony maneuver was exposed when the Senate attempted to pass a stand-alone bill giving doctors back the pay cuts taken out in Baucus's bill. There are other similar gimmicks which reveal that much of the cost-cutting is a mere illusion. It won't happen.
The bill raises $700 billion in new taxes. That much, you can be sure, is real. In addition to the explicit taxes in the legislation, the 1,990-page House bill imposes all kinds of uncounted taxes on insurers that will dramatically increase private health insurance premiums. This is similar to the Baucus bill, which would cause health insurance premiums to go up for most individuals as much as 199 percent! The true cost of the Baucus bill, when these phony savings and other hidden costs are considered, is at least twice the CBO estimate.
But the biggest fraud of all is that in order to make this program "budget-neutral" -- i.e., not add to the deficit on paper over the ten years estimated -- tax collections and program cuts begin immediately but the new program itself does not start fully paying out until 2015. So they are covering five years of cost with ten years of tax collections! Going past 2019, the deficit will skyrocket.
This all assumes, of course, that the projections they have produced have some basis in reality. The analysis so far should belie that notion. But it gets much worse. As explained in an earlier article, such projections never include these programs' huge ripple effects.
First, the market distortions created by such programs require the government to create yet more programs to deal with them, for example, enforcement. Beltway "think-tanks" get involved with all kinds of new ideas, and some of these proposals become law, which creates yet more bureaucracy. Politicians and beneficiaries get together to dream up new fixes and adds.
Second, they do not include the many changes and additions made after the bill becomes law. Such changes invariably and dramatically increase program costs.
Finally, they never account for the explosion in demand created by moral hazard -- i.e., the tendency of people to demand more services when the perceived cost is minimal or zero.
For example, Medicare and Medicaid have grown 2,735 percent between 1967, the first year they paid benefits, and 2008, the last full year for which actual data is available, after correcting for inflation. Together Medicare and Medicaid are the largest expenditure in the federal budget. In inflation-adjusted dollars, Medicare paid out a modest $17 billion in its first year of operation. In 2008, that cost rose to $455 billion.
We are still waiting for Congress to explain how this monstrous bill is going to cut our costs. Included in the bill is about $400 billion in cuts to Medicare -- spread over ten years. Will that do it?
Given the system's current total outlays of about $500 billion, that is a significant cut. But how do Pelosi and Co. plan to ration the inevitable cuts in Medicare services to come? You guessed it. To paraphrase President Obama: "You'd better take the pill, Granny." And despite supporters' claims that this is a reasonable provision, the government will become very pushy with "end of life counseling." They will have to be. The resources will just not be available to handle demand. So if your idea of cutting costs is to cull the elderly from the population, you should be okay with this bill.
Along with the death panels, this bill will create a new "Health Choices Commissioner" to lead a new Health Choices Administration with the power to oversee and influence every aspect of health care, from auditing private insurance companies to dictating policies and coverages, from collecting information on your health care to deciding what your doctor gets paid.
Congress is selling their "reform" idea on the notion that we were paying too much for health care in the first place. It turns out that Congress isn't really interested in what we pay for it. Because for those of us who actually do pay for our health care, our costs are going to go through the roof!
For the privilege of paying much more than we pay now, we will get to see the quality, variety and availability of health care take a nosedive. If we are elderly, we can expect much longer waits for whatever care will still exist. All this is being done in the name of forcing a small segment of the population (12 million - about 4 percent) to get health insurance, even though those people can already receive medical care if they seek it out.
We could go through this bill page by page and dissect every item to demonstrate the critical omissions, budgetary shenanigans, faulty reasoning, and outright dishonesty. But whatever the cost of this monster, we shouldn't even be talking about it because it shouldn't even be on the table. Never mind the fact that our crippled economy cannot handle another tax-and-spend body blow. Never mind the fact that the Constitution does not countenance this role for government.
This legislation is not about health care, and it is not about covering the few people who can legitimately be characterized as "uninsured." It is about raw political power, pure and simple. The Communist from Chicago and his congressional fellow travelers want to make sure the American public is under their collective thumbs in the most effective way possible: by having influence over our physical health.
Lenin said that "Medicine is the keystone of the arch of socialism." Like the Nazis in World War II and the Soviets throughout the 20th century, the government intends ultimately to dictate the kind, level, and quality of care we all receive -- and where we receive it, too. And just like Stalin's Soviet Union, the Nazis meant it when they said "we'll take care of you." But theirs is not the kind of "care" I would wish on anyone.