Why Does the Government Want to Take Over Health Care? Big Labor

The federal take-over of Americans’ access to medical services is proving a tough mission, as the town halls and other signs of popular resistance demonstrate. Medicare, the territory first occupied almost half a century ago, is proving a major obstacle.

Seniors are rightly worried that efforts to cut costs from the nation’s health tab, epitomized by the president’s ill-informed comparisons of expensive “red pills” to cheaper “blue pills,” threaten their free access to medical care. So, rather than having established a solid beachhead, LBJ’s Great Society program seems to have set a time-bomb in the path of its successors in the Obama regime, now hell-bent on completing the federal take-over of Americans’ access to medical services.

Coming on the heels of bailouts and stimuli that pummeled the public into disbelief, the Congressional Budget Office’s cost estimate of one trillion dollars has characterized the health-care “overhaul,” as the media insist on framing it, as just another Big Government program. Increasingly desperate advocates emphasize that the trillion dollars covers a 10-year period, but folks know that, once things get rolling, even good-faith cost estimates seriously underbid actual costs. Medicare costs during its first three decades were nine times greater than the estimates produced when the program began.

The CBO estimates will likely suffer a similar fate, should the take-over proceed. Its analysis anticipates that the “public option” will cause only 11 million people to lose their private coverage as employers dump them. Economist Stephen T. Parente and colleagues believe that this is a serious underestimate, and expect 40 million people to fall into dependency on the “public option,” which leads them to a cost estimate more than twice as big as the CBO’s: between $2.1 trillion and $2.4 trillion.

Another credible estimate, by economists at the Lewin Group, figures that more than 83 million people would lose their employer-based benefits and go “public.” Clearly this thing is out of control but the real source of bewilderment is why politicians don’t quit while they’re ahead.

Medicare, after all, serves the political class beautifully. This Ponzi scheme, for which the hospital “trust fund” alone will run out of money by 2017, has an unfunded liability of almost $40 trillion. Even so, Medicare already allows the government to transfer oceans of income from working people to senior citizens.

Currently, more than 150 million working people are paying the medical claims of 45 million seniors on Medicare (through both Medicare payroll taxes and personal income taxes), which avoids the need for explicit rationing that would arise if the program were “universal.” Sure, this is going to crash into a brick wall in a few years, as the baby-boomers retire, but that is another problem for another Congress. It does explain, however, why the Obama regime has avoided using “Medicare for all,” Senator Ted Kennedy’s pet term, in a failed attempt to misdirect the public from linking the “public option” with this fiscal train wreck.

Seniors like to participate in town halls, are very likely to vote, and were happy until now. Working people don’t have time to waste at town halls, are significantly less likely to vote, and suffered silently until now. Why upset the apple-cart? The answer lies with Big Labor, which has more success recruiting government employees than workers in the private sector.

America’s political class commands almost half the spending on medical services but wields significantly less control over providers than other countries. Despite claims that a government “overhaul” will only improve incentives, control of providers follows control of payment as surely as night follows day, as it has in Canada and Britain.

The government’s failure – so far – to take direct control of hospitals is a sharp stone in the shoes of the trade-union bosses, who have no other hope of expanding their empires. Facing town-hall rebellions is tough duty for politicians seeking to give the unions what they want, but many seem up to the task.

John R. Graham is Director of Health Care Studies at the Pacific Research Institute.

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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