When big shots the world over get really, really sick, they come to
America for treatment, because we've got the best doctors, the best
hospitals, the best medical technology and the best medicines.
These aren't cheap. We also have the most expensive health care in the
world. Spending for health, which accounted for five percent of our
gross domestic product in 1960, has risen to 18 percent today, and, says
President Obama's Council of Economic Advisers, will rise to 34 percent
of GDP by 2040 if nothing is done.
So it's hard to disagree with the president when he says getting a
handle on health care spending is an urgent national priority. But Mr.
Obama proposes to do this by having the government spend at least a
trillion dollars more on health than we're spending now. That's an
imprudent expenditure to make when the Congressional Budget Office (CBO)
is forecasting a deficit of $1.85 trillion for this fiscal year.
And $1 trillion is just for openers. That's what CBO estimated the cost
over ten years would be of the major portion of one of the two health
care bills pending in the Senate. The CBO's preliminary estimate for
the cost of the other is $1.6 trillion.
The president's proposed "reform" costs so much chiefly because he wants
to extend coverage to people who don't now have health insurance. There
are arguments for extending health insurance coverage, but saving money
isn't one of them. So I suspect Mr. Obama is seeking his proposed
"reform" for reasons other than the one he's stating.
The Census Bureau estimates the number of the uninsured at 47 million.
Because most health insurance is provided by employers, people without
it tend to be those who are between jobs. Though the total number of
people without health insurance has remained fairly constant, there is a
lot of turnover. A 2003 CBO study indicated 45 percent of the uninsured
are uninsured for four months or less. Only 29 percent were uninsured
for more than a year.
According to Census Bureau data, 27 percent of those without health
insurance are foreign born. According to a 2005 Rand Corporation study,
illegal immigrants accounted for a third of the growth in the number of
the uninsured between 1980 and 2000.
The president wants to create a "public option" based on Medicare for
people currently without health insurance. Since Medicare is bankrupt,
and, according to a 2001 paper by the National Bureau of Economic
Research, nearly 20 percent of Medicare expenditures produce "no
measurable survival benefit," it is a poor model for fiscal
In recent years, the cost of Medicare has risen more slowly than the
cost of private health insurance. But this is chiefly because of cost
shifting. Medicare achieves such savings as it does by cutting
compensation for doctors and hospitals, who then charge patients with
private insurance more to make up the difference. Private health
insurance policies also bear the brunt of the cost of treating those who
come to emergency rooms without health insurance.
Under the bill proposed by Sen. Ted Kennedy (D-Mass), all businesses
would be required to provide health insurance for their employees, or
pay a tax so the government could. Since most companies which don't
provide health insurance don't because they can't afford to, this
provision would force them to lay off workers. Two recent studies cited
by Michael Tanner of the Cato Institute estimate an employer mandate
would cost between 315,000 and 1.6 million jobs over five years.
The additional costs imposed by the bills under consideration also
would force many businesses which provide health insurance to drop it.
The CBO estimates the Kennedy bill would provide health insurance to 39
million who don't have it, but would cause 23 million who have private
insurance to lose it. The losses will be magnified if private health
insurance benefits are taxed.
Americans who have private health insurance want to keep it, and they
don't want to be taxed more to provide health insurance to the
uninsured, especially if they are illegal aliens. That's why Mr. Obama
wants to rush a health care "reform" bill through Congress before people
are aware of what's in it.