Health care overhaul will prove costly

Freedom New Mexico

You have to admit it takes a certain amount of chutzpah to try to sell expanding the role of government in health care as a way of controlling costs and improving services. Yet judging by recent statements and his speech Monday to the American Medical Association, that has become one of President Barack Obama’s chief talking points as he tries to get a dramatic overhaul of the health care system passed by Congress this year.

So when was the last time something run by government was a model of low cost and efficiency?

The cost of health care has increased exponentially every time government has gotten more deeply involved, beginning with Medicare in the 1960s. Indeed, a recent report from the president’s own Council of Economic Advisers notes that, since 1975, health spending per person, adjusted for inflation, has grown 2.1 percentage points faster than overall economic growth per person.

The reasons are fairly simple. When most of the costs of medical care are paid by a third party, whether a private insurance company or the government, people tend to demand more medical services than they might actually need for maintaining good health. Add in life-saving but expensive new technologies and medical malpractice concerns, which not only drive up physicians’ fixed costs with higher insurance premiums but induce some doctors to order arguably unnecessary tests and procedures to avoid lawsuits, and you have something of a perfect storm of rising costs.

To argue that not only more of the same, but a lot more of the same, will bring costs down is curious, indeed.

Even the Obama administration acknowledges the kinds of reforms he is advocating — details are still lacking but it’s essentially offering more choices, including a government-run plan, to people without insurance, and either an individual mandate requiring everybody to have health insurance or a mandate for employers to offer insurance to all employees — will cost at least $1 trillion over 10 years.

Like most estimates by advocates of new government programs, that is undoubtedly a low-ball estimate.

Saving that much through researching best practices, increasing use of electronic technology and other reforms is unlikely. President Obama has said he will cut Medicare by $300 billion over 10 years, but that’s unlikely. So the likelihood is more taxes.

The two options most discussed are making employer-provided health care benefits taxable or limiting the amount higher-income people can deduct on their income taxes. Both options would face opposition, and neither would raise enough money.

The more we learn about the president’s health-care ideas the less attractive they look.