Monday, June 22, 2009

Obama-care won't reduce health care costs

Robert Reich @ Tapped:

Momentum for universal health care is slowing dramatically on Capitol Hill. Moderates are worried; Republicans are digging in; and the medical-industrial complex is firing up its lobbying and propaganda machine.

But, as you know, the worst news came days ago when the Congressional Budget Office weighed in with awful projections about how much the leading health-care plans would cost and how many Americans would still be left out in the cold. Yet these projections didn't include the savings that a public option would generate by negotiating lower drug prices, doctor fees, and hospital costs, and forcing private insurers to be more competitive.
I'm not aware of evidence that savings would be realized from any of the things on Reich's list. Proponents of government-run health care make the claims, but real world examples suggest that costs will rise rather than fall. Just this morning, I heard a report on the massive rise in health care costs in Massachusetts. This is the plan which is to be used as a model for national health care, yet health care costs in Massachusetts have increased at twice the rate of the rest of the nation. The report also noted that the Massachusetts plan still leaves about 5% of the population uncovered. That extrapolates to about 15 million uncovered Americans if the Mass plan were scaled up to the national level.

A public option may indeed lower drug prices, since a single-payer government could effectively put a gun to the head of the pharmaceutical companies. But, as Thomas Sowell so often points out, lowering the price of something doesn't change it's cost. A company whose profits are stripped away will be forced to downsize and cut back on research. This will cost jobs in the short term, and lives in the long term. There are no short cuts, just trade offs.

Forcing doctors to accept lower fees will have unintended consequences as well. We see evidence of this already with Medicare and Medicaid. Many doctors simply refuse to accept patients under these plans, since payouts often aren't enough to cover expenses. If a Medicare-type of system is forced onto the medical profession as a whole, we can expect to see fewer people entering the field and a rationing of the services offered.

That government-run health care would "force private insurers to be more competitive" is a canard. There are already hundreds of companies competing to offer medical insurance. Adding another (the government) won't increase competition in any real way. What is far more likely is that the government option will be heavily subsidized by taxpayer dollars. Rather than create competition, this will simply give the government an unfair advantage and make it unprofitable for insurance companies to stay in business. The government will ostensibly be offering a cheaper product, while the real costs are hidden in various forms of taxation.

If the goal is to increase competition in the insurance business, this can be accomplished more effectively, and at no cost to taxpayers, by allowing Americans to purchase insurance across state lines. But competition isn't the goal, and the illusion of competition is being used to justify shifting the industry from the private market to the government.

I'm not an expert on health care. But the more I learn about the effort to nationalize our health care system, the more I realize that it has nothing to do with either saving money or improving health care. If it did, we wouldn't be ignoring all the evidence that it will increase costs and lower quality. It's as if the evidence just doesn't matter.

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