Obamacare’s Error – Pacific Research Institute

Obamacare’s Error

The New York Post, July 31, 2009

DON’T be distracted by the inside-the-beltway haggling over arcane details — ponder the big picture and apply common sense to the claims of our would-be health reformers.

This week’s so-called breakthroughs on both the House and Senate sides illustrate how our politicians are trying to bamboozle us.

On the House side, what passes for fiscally responsible Democrats were reportedly negotiating hard with their party’s urban-liberal leaders on behalf of the US taxpayer. In fact, the “moderates” signal achievement appears to secure more spending on rural hospitals.

In other words, they didn’t kill the socialized government-plan option; they just made sure that it spends enough money in their districts.

Over in the Senate, Max Baucus (D-Mont.) was busy cutting his bill’s price to under $1 trillion. One “difficult compromise”: He’s replacing the House’s government-run option with a “co-op plan.” But it’s a funny co-op that requires $6 billion in taxpayer start-up money and a government oversight board. It’s simply a public plan with a rural accent.

Meanwhile, the moves to cut costs simply lacerate Medicare and send the states more of the bill for Medicaid.

What’s going on here?

Our politicians have decided that “health-care reform” should focus on the uninsured and on escalating health-care costs. But pols hate selling sacrifice and detailing tradeoffs. Instead, they base their plans on the idea that we can get both cost savings and coverage expansion at the same time — as if you can eat more, exercise less and still lose weight.

The “magic bullet” that’s supposed to make this work? The idea that the government is more efficient than the private sector and that Medicare is more efficient than privately-run insurance programs.

Where is the evidence? This is akin to the assertion that we need to create the United States Postal Service to compete with FedEx and UPS.

* Medicare has done an adequate job of covering seniors, although it is not nearly as generous as private plans that Americans leave behind at retirement. It has struggled to keep up with the times, which is why it only included prescription drugs in 2003 and has experimented with Medicare Advantage Plans to offer a modern American benefits structure. It’s done a poor job of controlling costs.

* Medicaid, the other government-run plan, is even worse. It’s riddled with fraud, is bankrupting state budgets and transfers massive costs to the private sector with its low payment rates.

Medicare is worth pondering for three reasons. Seniors generally like it. As currently constructed, it already underpays doctors and hospitals and shifts billions of dollars in costs to private-sector plans. And the Democratic plans all rely on reducing future Medicare spending to fund “universal coverage.”

Democrats claim that their Medicare cuts will merely reduce reimbursements to insurance companies. Yet these cuts will result in fewer services to seniors — who will protest, so the cuts won’t stick.

So where will the billions for universal coverage really come from? Major tax hikes, most likely. If not, then more deficits and debt.

Advocates of government-run national health care assert that expanding insurance will cut costs over time by creating a more healthy population. Again, we need to apply common sense. People with insurance consume more formal health care than people without insurance — and that costs money. So insuring more people must radically raise outlays, not reduce them. Taxpayers and employers will fund the expansion through job-killing taxes or massive deficits.

There are ways to insure more people and to reduce health-care outlays. Everyone should get the same tax break, whether or not they get their insurance via their employer. State mandates — saying, for example, that policies must cover chiropractors — drive up costs. So does the refusal to pass strong medical-malpractice reforms.

But the Democratic plans all boil down to creating new taxpayer-supported health-insurance programs by supposedly cutting expenditures on existing taxpayer-financed programs and raising taxes on a private sector in the midst of a recession.

Reformers are making promises the government can’t keep. The result will be skyrocketing costs — and pressure for an even more radical makeover of the system.

That’s just common sense.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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