Well, whatever else can be said about health care reform, it now seems clear it won’t be cheap.
Rep. Charlie Rangel (D-NY), who heads the House Ways and Means Committee, says he expects to raise $1 trillion for health care reform (over 10 years) by cutting Medicare and Medicaid spending by $400 billion (ouch!) and raising taxes by $600 billion (double ouch!!)
President Obama is putting a little detail in his proposed Medicare cuts.
- He wants to chop $106 billion from the disproportionate share hospital program. Actually, cutting the “DSH” program is reasonable. It’s federal money that reimburses certain hospitals that treat a “disproportionate” number of uninsured. If nearly everyone has coverage—and that’s a big IF—then reducing DSH payments makes sense.
- The president also wants to cut $110 billion by making “productivity adjustments” to Medicare providers. This is a euphemism intended to hide what he really wants to do. Medicare imposes price controls on doctors and hospitals. A productivity adjustment simply means the government-mandated reimbursement will be lowered by some bureaucrat-approved amount. And the justification is that it will force doctors and hospitals to look for ways to be more “efficient.”
What happens in the real world—where the administration’s economists no longer live—is forcing prices artificially lower leads to access problems and rationing.
And then there’s the tax increases. Extracting an extra $600 billion from an already struggling economy is no mean feat—though it certainly is a mean trick.
Limiting the employer exclusion—i.e., money employers spend on health coverage is excluded from employee income and so isn’t taxed—is probably the only way to get that much money. And while a good economic case can be made for capping the exclusion, simply doing it as a way to pay for a massive expansion in government-run health care isn’t one of them.
And here’s the kicker: The Congressional Budget Office (CBO) just “scored” Sen. Kennedy’s (D-MA) health reform proposal as costing $1 trillion, but with only a net gain of 16 million insured. That’s because lots of people paying for private insurance would drop it and jump the government bandwagon.
That works out to about $62,500 per newly insured American.
You thought health insurance was expensive before, wait until the president makes it “affordable.”