Free Markets, Free People

What Will Be The Real Cost Of Health Care “Reform”?

From a Washington Post editorial commenting on the health care industry proposal yesterday to try to save 2 trillion dollars over 10 years:

But it is important to note what wasn’t included yesterday. None of the interest groups signed up for a specific number; no one is saying who will sacrifice what, or how much. All are promising to “do our part,” but the actual share of the $2 trillion that would fall on each pair of shoulders was not laid out. What would make up the substance of the plan? That remains to be seen. How would the private sector be held accountable for this promise to reduce costs? That, too, remains to be seen.

Of course, Barack Obama’s promises to save money through the usual nebulous “waste, fraud, and abuse” rhetoric are no more specific than those proposed by the “interest groups” yesterday:

Make Health Coverage Affordable. The plan must reduce waste and fraud, high administrative costs, unnecessary tests and services, and other inefficiencies that drive up costs with no added health benefits.

As is obvious, the assumptions in this sentence are legion and that includes the savings.

The White House has emphasized repeatedly that health-care reform is entitlement reform — that is, an answer to the nation’s long-term fiscal challenge. Yet, so far, it is backing a plan to expand coverage that would cost taxpayers between $1 trillion and $1.5 trillion over 10 years, while it has proposed health-care savings of only $309 billion.

Calling it an entitlement reform and “an answer to the nation’s long term fiscal challenge” effectively lumps all health care under government auspices. An entity which has managed to mismanage the portion it has assumed over the years into a “fiscal challenge’ now wants the rest of the industry under its effective control with an initial price tag of 1.5 trillion (anyone who has ever monitored government estimates of cost know they are always low ball estimates which end up costing many more times the initial estimate).

I’d like to see the WaPo challenge that estimate and this:

Financing Health Care Reform. The reserve fund is financed by a combination of rebalancing the tax code so that the wealthiest pay more as well as specific health care savings in three areas: promoting efficiency and accountability, aligning incentives towards quality and better care, and encouraging shared responsibility. Taken together, the health care savings would total $316 billion over 10 years while improving the quality and efficiency of health care, without negatively affecting the care Americans receive.

You can read the specifics of the administration’s plan below the cited paragraph, but in essence it consists of curbing waste, fraud and abuse (as if that’s actually measurable in terms of savings) and increasing “quality” of care (an “efficiency” that assumes the present “quality” isn’t good enough), stressing preventive care (and assuming everyone will take advantage of that) and reducing drug prices (a form of cost control).

How anyone assumes even $316 billion in savings based on those assumptions is beyond me. But what one can fairly claim, given experience with government proposals and estimates, is that 1.5 trillion as a “cost” figure is probably well below its eventual or real cost. If anyone actually believes the government will be more efficient in the delivery of health care than a market based system (something we don’t have, even now, as government’s intrusion has distorted that market) will gladly buy into the claims being made. Those of us who have seen these sorts of grand programs and estimates before (check into the promised cost of Medicare and its eventual real cost) know that we’re being led down the primrose path to ruin by a bunch of smooth talking politicians who really haven’t a clue … again.


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22 Responses to What Will Be The Real Cost Of Health Care “Reform”?

  • Carol Negro at the American Thinker:

    Growing government is the real reason Progressives are pushing socialized medicine. They know perfectly well it doesn’t work. They are neither blind nor stupid. They don’t care about your health, or what healthcare costs you now, or about rationing or low quality care. No arguments about the inadequacy of government-run healthcare will move them. Socialized Medicine grows government, and gives it total power over our bodies. They will literally, with the stroke of a pen, have life and death power over every single person in the country. It doesn’t get more totalitarian than that.

  • This morning, Yahoo! News had an article, citing an “unnamed administration official”, who claimed that Porkulus will save 3.5 million jobs.  This was reported without the slightest hint of skepticism or even a question about how the White House arrived at that figure from MiniTru.  One suspects that this White House could announce that Porkulus would save or create a billion jobs and MiniTru would report it without comment.

    The White House Council of Economic Advisers on Monday released a report showing the plan would save or create 1.5 million jobs by the end of 2009 and 3.5 million by the end of 2010.
    While that is unchanged from a report made in January, the official said conditions have deteriorated since then.
    “In 2010 quarter four, wherever we were going to be, we felt that we were going to be 3.5 million jobs bigger than that because of the stimulus package,” the official said.
    Because of the lower baseline, the unemployment rate at the end of 2010 will be higher than previously anticipated, the official added.

    There is no reason to think that the reporting will be any different when TAO succeeds in establishing MiniHealth.  As far as MiniTru reporting will go, stories about waste and fraud will disappear down the ol’ memory hole to be replaced with glowing accounts how how people are living longer and basking in total health and happiness due to the wonderful, wonderful new health care system.

    There were times when it seemed to the animals that they worked longer hours and fed no better than they had done in Jones’s day. On Sunday mornings Squealer, holding down a long strip of paper with his trotter, would read out to them lists of figures proving that the production of every class of foodstuff had increased by two hundred per cent, three hundred per cent, or five hundred per cent, as the case might be. The animals saw no reason to disbelieve him, especially as they could no longer remember very clearly what conditions had been like before the Rebellion. All the same, there were days when they felt that they would sooner have had less figures and more food.

    George Orwell
    Animal Farm

    … The Times of the nineteenth of December had published the official forecasts of the output of various classes of consumption goods in the fourth quarter…, which was also the sixth quarter of the Ninth Three-Year Plan. Today’s issue contained a statement of the actual output, from which it appeared that the forecasts were in every instance grossly wrong. Winston’s job was to rectify the original figures by making them agree with the later ones. As for the third message, it referred to a very simple error which could be set right in a couple of minutes. As short a time ago as February, the Ministry of Plenty had issued a promise (a ‘categorical pledge’ were the official words) that there would be no reduction of the chocolate ration…  Actually, as Winston was aware, the chocolate ration was to be reduced from thirty grammes to twenty at the end of the present week. All that was needed was to substitute for the original promise a warning that it would probably be necessary to reduce the ration at some time in April.

    George Orwell

    Welcome to Oceania.  Enjoy your stay.

    • You hit the nail on the head.  The idea that a government run health care system will have “accountability” is laughable.  I am reminded of this story from England in February 2008, where the NHS hospitals were keeping sick people waiting in ambulances outside the hospital in order to comply with new regulations regarding waiting times in emergency rooms.  Instead of shortening the wait, they just prevented the sick from entering the emergency room so their average wait times would meet the standard.  Accountability my ass.

      We are in for a world of hurt.  The author of the American Thinker article is right.  This is all about power.  Obama is a nightmare, but my fellow citizens who support him are an even bigger nightmare.  

  • Require that all prices be posted publicly and disallow insurance coverage for all routine care.  People who can shop for groceries can shop for healthcare if they have the information they need.  Insurance companies have to make a profit to survive.   So do doctors.  So let’s get the insurance companies out of the routine stuff.  I don’t have my car insurance pay for oil changes, or they’d cost $100 witha $40 co-pay. 

    • Your assumption is faulty. You assume that the reformers actually mean ‘insurance’ when they use that word. In reality, what they want is health care welfare, where nobody has to pay for their own health care.  Somebody else will pick up the tabs; the rich, greedy profit-swollen insurance companies, niggardly*  HMOs, and waste-fraud-and-abuse.

      Just a variation on that old political adage , “Don’t tax you, don’t tax me, tax that guy behind the tree”.

      *Uh huh, that’s right, you read that correctly, yeah, I used the other N word.  All you illiterate PC poltroons can consume feces and expire!

    • Reform the tax code to remove employer provided insurance from the equation. Then providers would begin providing costs.

      Right now, with most health care paid by third parties, the cost to the consumer is irrelevent. There is no market push towards lower costs, hence no need for the consumer to know th costs.

      But this doesn’t matter, as others have noted the Democrats are not doing this to “fix” or improve healthcare.

  • If we think that health care is expensive now, wait until Democrats start giving it away for free. 

    This will be an interesting debate in congress.  House Democrats should be getting nervous about now with Obama’s out of control spending and a public unwilling to mortgage their children to pay for it.  Still… they will probably go along.

    The one thing that could be done with health care to help control costs is to limit punitive damages that wind up being paid to attorneys.  Attorneys, along with the labor unions, own the Democrat party, though, so this will never happen.

    Health Care Reform will take a lot to pass Congress though.  For a list of top ‘extras’ that Obama may have to throw in can be seen at:

  • And now, without further adieu,  we bring you, the SodaTax…because sugary Soda  consumption(and other drinks of that type) costs the health programs they haven’t created yet and need to fund.

    Yes kids, it’s your government ‘discouraging’ your consumption of items by taxing them, while at the same time, staking tax revenue growth and spending on the very thing they’re allegedly discouraging.   Obviously can’t have you drinking that crap because it costs more for the health programs they haven’t instituted yet.

    But remember only the RICH will have to pay more in taxes!  The Messiah and his buddies in Congress actually plan to pull the funds out of your butt like magic flying unicorns and according to them you’ll never even feel it (unless you’re rich of course).

    Make sense yet?  Yes indeed, hopey changitude is coming your way.

    • And now, without further adieu,  we bring you, the SodaTax…because sugary Soda  consumption(and other drinks of that type) costs the health programs they haven’t created yet and need to fund.

      Taxing vice is not a new idea, as I’m sure you’re probably already aware of.
      What we need is … dare I say … a progressive tax on foods.  Not in a punitive way, but in a beneficial one.  Now I may be biased as I am a produce of what most consider a healthy alternative to sugar or HFCS, but we need to make it cheaper for producers to supply a healthier product.  I’ve thought long and hard on this, as any kind of government intervention into the market goes against everything I believe in, I consider health care to be in a crisis nature.  We’re getting fatter and sicker, and health care costs are not going down, despite all of the medical advances.

      I’m not going to pretend that I have a solution, just an idea.  What we need is to provide a tax incentive, even a subsidy in some cases, for producers of healthy foods.  The government will never be able to socially engineer a public to eat barrels of wheat germ, Dig’Em loves sugar smacks… and goddamit, so do I… but something must be done.  And bringing down the cost of healthier alternatives is something that a resurgent Republican party should be looking at. 
      Not just a new face.

      The general public is, as we know, keen to suck on the government tit.  What a new Republican party should be saying is, “We’re not going to let you suck on the cow’s milk tit, but here’s a soy milk tit you can suck on for a while.”  (Not that I have anything against a cow’s tit.  Not at all.  In fact, I’m sucking on a cow’s tit right now.  …  Okay, this cow is drunk on Vodka and Khaluha, but work with me here. – Spasibo!)

      Hammering the Dems on their tax and spend philosophy won’t work for the near future.  And to wait for it to fail might prove too late.
      It’s about ideas.  And the Republicans better come up with some … soon.


      • No, taxing vice is old old old. 
        Aside from the TAX issue, I understand it, but this business of ‘for your own good’ is bull hockey.  They don’t want us to stop, they want us to continue to practice our preferred legal vices and to shut up and pay the taxes on it. 
        Since they can’t be honest about anything else though why should I expect them to be honest about this.

        As for the Republicans…I have nothing to say, they’ve branded their beer as Road to Hell Light, same crappy beer the Democrats make, it just takes you longer to get ill from drinking it.

  • The general idea here is that we’re supposed to feel that all these competing insterests will lower costs across the board by cooperating. Maybe the government will “help” them cooperate? 

    Now, nobody seems to be organizing an actual trust here. It’s all completely imaginary so far, and imaginary trusts don’t raise costs. What we have to fear is any move to make this a reality. A private trust will increase costs significantly. Anything involving the government, and it’ll be vastly worse. 

    The talk about lowering costs is a shockingly obvious lie. We really are in Orwell territory here. 

    As Eric Florack observes up in #1, this isn’t about your health. It’s about power. 

  • Sorry folks, but the total cost of health care is never, ever going down in a free market. The only way to limit health care costs is to restrict the amount of health care.

    The demand for health care is pretty much infinite; if supply increases (new drugs, etc.) demand increases. I don’t know about anyone else, but if there is a new drug or treatment for my ailments I am going to use it. If I can get someone else to pay for it, even better. That means I can get more health care AND a new computer. I don’t have to make a choice, I can have my cake and eat it too.  It is a good thing all those young, idealistic Obama supporters know how much I am going to cost them. There is a Liberal born every minute.

    My advice to the so-called baby boomers is to rejoice and give thanks! We are in at the beginning of the health care Ponzi scheme that is about to inflicted on the US.

    • Just because the demand for something is infinite does not mean the prices will go up indefinitely.  After all, look at food: cheap as dirt, and yet infinite demand.

      If anything, the higher the demand then the cheaper the prices will be, since it encourages more supply.  More supply always means lower prices.

      • See Dr Bob’s post below on your supply and demand thing.  There AREN’T going to be an increasing supply of doctors willing to give their lives for the good of mankind at a low price, any more than there are an increasing supply of auto mechanics bent on sacrificing to reduce the cost of your car repairs, or an increasing supply of plumbers dedicated to earning low wages just for the sheer joy of fixing your plumbing.

        People do things for personal reasons that frequently involve  rewards, and rewards are usually nasty old tangible things like money, and cars, and a vacation house in Bar Harbor Maine.  If the rewards are greater elsewhere the smart folks who used to consider becoming doctors are smart enough to realize they can make a faster easier buck in another profession and endure less grief.   This is a ‘specialty’ profession that you want to attract the brighter and better people.  Since it’s a specialty, the supply of them will be scarce in comparison to the normal supply of other professions.  That’s just the nature of the beast until you train the gifted young-uns to sacrifice their lives for the greater good of mankind. 

        How many colorectal surgeons started life as children with a burning passion to spend their time fixing other people’s butt holes for a living?  How many are going to choose to do that for, say $45,000 a year?

      • COSTS will go up, not PRICES. The percentage of GDP spent on health care will keep going up as long more of it becomes available. Some prices will decrease, some will stay more or less the same, and some may increase. I doubt that my doctors will ever be overcome by the urge to decrease their income, for example. And,  there is already a shortage of some doctors and nurses. Either their compensation goes up or we resort to conscription.

        My GP, for example, recently changed to one of those boutique practices. The practice he was in had over Ten Thousand (that’s right, 10,000) patients, several thousand per doctor. Those that chose to retain his services now pay more. He is certainly happier and less overworked, and his patients arguably get better care.

        So yes, total health costs will continue to rise.

  • I have some lefty friends and after a few drinks and waxing philosophical, I explained to them that its not as if people on the right like the rat race. Or shopping for healthcare. 

    Its just that there is not much of a better way to do this stuff.

    Seriously, if it were possible to have everyone be artists and not do any work but live well, who wouldn’t agree to that? If aliens came down and offered free healthcare, we’d take it, gladly. Its just that its not really free. That ditch isn’t going to dig itself.

  • But since its natural for people to worry excessively about healthcare (after all, no on wants to die) then perhaps the right should come up with an alternative that addresses people’s fears, if only to prevent nationalized healthcare which could seal the fate of any attempt to shrink government. Think of this as allowing the field goal to prevent the touchdown.

    1. Mandatory insurance. I’d have an opt out, but you know, this has to be done to stop the  media from printing sob stories about how so-and-so can’t afford healthcare. No screening for pre-existing conditions allowed.

    2. Subsidize individuals and families based on some metric, with a sliding scale that makes the subsidy gradually disappear as income increases. Since we already have medicaid, etc. its not as if this is not already being done.

    3. Make the insurance market a national, and free market. There should be one default bare bones insurance plan that you will be enrolled in if you don’t choose your own. Medicaid and medicare will be rolled into this and it will be provided by private insurance companies. 

    4. Tax employer provided insurance. Make policies portable.

    Okay, this will be expensive, but here are the advantages…

    a. It stops the issue while maintaining a free market as possible.
    b. It prevents the creation of huge bureacracies who would naturally vote left because that’s where their pay is determined.
    c.  It would keep innovation happening.

    Also, I would pay for this by elminating the tax-free status of municipal and state bonds. These are tax shelters used by wealthy people to avoid taxes and are “unpatriotic.” Let government compete with companies for capital. Let John Kerry pay taxes on his wealth. If some localities cannot fund their budgets, they should examine carefully how the private sector manages these issues.

    Rant off.

  • We physicians know all about the government’s “fraud and abuse” efforts to reduce costs — they’ve been ongoing for a number of years, and they’re horrendous. (I did a post on these efforts <a href=””>here</a> and <a href=””>here several years ago). If you think of the way the feds handled Chrysler’s non-TARP secured creditors, you get the general gist: abusive audits with horrendous penalties for “fraud”, which in the vast majority of cases is simply inability to understand and implement the Byzantine federal Medicare regs or meet their standards of documentation. The end result of even more abusive investigations and penalties is entirely predictable: physicians will refuse to see federally-insured patients, or will leave the profession, and their will be significant rationing due to inability to access health care providers.

  • Sorry folks, but the total cost of health care is never, ever going down in a free market. The only way to limit health care costs is to restrict the amount of health care.

    Exactly so. Let’s put that in perspective of the end users… you and I; When the government controls healthcare, it’ll not be about what’s best for you, but how deeply it affects the government, and specifically, how deeply it affects the people currently running said government. It cannot be otherwise. We have discussed on this blog many times, the lack of respect government as a rule has for individual rights. Think they’re going to have any greater degree of respect for your health, when it comes down to a question of your health, or their retaining power?

    • They’ll dress it up for what’s best for everyone, that’s the only suit they have in their closet.  Everybody who hears that and wants to believe (sort of like the words  ‘change’ and ‘hope’ in the last election)  interprets the ‘everyone’ in that statement as truly every ONE, meaning what is truly best for every individual.

      But actually, it won’t be what’s best for any individual, it’ll always be ‘what’s best for EVERYONE’ where everyone means the collective members of society.  Their hypotheticals when selling the plans will always cite the benefits to a hypothetical individual, but their realities will frequently screw individuals over, and the severity of that screwing will quickly end up being based on the age of the individual being treated (unless they’re a Senator, or Congressman of course….)

  • Rationing and allowing people to simply die at home while in the queue will no doubt save the government billions of dollars–“mission accomplished!”