HHS: ObamaCare would make costs go up
Share/Save/Bookmark Thursday, October 22, 2009

 
Does the official HHS website include their latest study of ObamaCare along with their propaganda links? Not so far, but the AP picked up on the new analysis, which shows that far from containing costs, the proposals for health-care reform on Capitol Hill will actually increase costs, thanks to an entirely predictable response from people with new health insurance:
The nation’s medical costs will keep spiraling upward even faster than they are now under Democratic legislation pending in the House, a report from government economic experts concluded Wednesday.

Republicans said the report is a warning sign that health care legislation is likely to fall short of President Barack Obama’s goal of “bending the cost curve” by slowing torrid rates of medical inflation. …

Unlike previous estimates that have focused mainly on the legislation’s impact on the federal deficit, the actuaries’ report looked at total costs, public and private, over the next 10 years. It found that the nation’s health care tab would increase somewhat more rapidly with the legislation than if nothing is done. The main reason: Newly insured people will seek medical care.

The nation’s health care tab, now at about $2.5 trillion annually, is projected to approach $4.7 trillion in 2019 without the legislation.

With the legislation, national health care spending would be nearly $4.8 trillion in 2019.
 This should surprise no one who looks at the actual cost problem in American health care. It comes from a lack of price transparency, thanks to an irrational system which has most of the costs paid through third parties. Consumers overuse the system and choose inefficient, expensive options for care because they have no idea of the costs, and providers locked into compensation schedules have little incentive to compete and to innovate. As a result, costs go up as demand increases irrationally, and producers don’t get rewarded for efficiency and excellence.

The ObamaCare model would make this problem exponentially worse by locking everyone into this faulty model. The HHS probably underestimates the increased demand that will result from imposing comprehensive plans on everyone in the country. Those who forgo health insurance to pay retail actually help the industry and reduce their costs of care in the short term, although they leave themselves vulnerable for catastrophic events.

The proper route for reform would remove pricing opacity and rely on consumers to make rational choices on health care. That would allow providers in clinics and hospitals to compete for consumers and get rewarded for excellence and efficiency. Those efforts would not only drive costs downward, but would also encourage more providers to enter the market to meet the demand. A combination of health-savings accounts with a move away from comprehensive insurance to catastrophic coverage would not only better serve Americans but would result in a massive boost to the health-care industry.

In the meantime, we should ask why the administration doesn’t pay attention to its own analysis. Perhaps it’s because the ObamaCare push has always been about ideology over rational policy.

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