January 2012

Health-care “reform” always costs more than predicted, as ObamaCare provisions have at the state level.  So the claim that the new, cheaper version of President Obama’s health care plan will cost only $829 billion, while not increasing the deficit, should be taken with a grain of salt.

Senate Majority Leader Harry Reid admitted that the actual cost will be more like $2 trillion, and health-care experts have given it a similar price tag of more than $2 trillion.

The reason for the lower $829 billion price tag was that the bill’s supporters promised to offset its costs by making massive cuts in Medicare that no one actually expects politicians to follow through on, since Medicare cuts infuriate seniors and doctors.

Year after year, Congress waives “the annual cut in fees paid by Medicare to physicians” mandated by an earlier law. Yet, now, backers of ObamaCare claim they will cut Medicare by much more to finance coverage of the uninsured. The most recent version of ObamaCare drafted by Senator Max Baucus of Montana claims it will also make “$240 billion in cuts to hospitals, home care providers, nursing facilities and hospices.” Based on Congress’s past track record, the chance of this happening is zero.

As economist and former Congressional Budget Office director Douglas Holtz-Eakin notes in the Wall Street Journal, the promised cuts to pay for ObamaCare will not happen: “Congress will not allow doctors to suffer a 24% cut in their Medicare reimbursements. Senate Democrats chose to ignore this reality and rely on the promise of a cut to make their bill add up. Taking note of this fact . . . destroys any pretense of budget balance.”

As Holtz-Eakin notes, some “middle-class families would get hit with a double-digit increase in their marginal tax rate” under this version of ObamaCare.

Moreover, state budget deficits and state taxes will increase under ObamaCare, which outsources costs to the states by requiring states to expand their Medicaid programs for poor people.

Backers of ObamaCare have refused to cut medical costs through tort reform, with Senate Majority Leader Harry Reid saying it will save “only” $54 billion. Yet they justify ObamaCare partly on the alleged need to prevent uninsured people from not paying their medical bills — even though unpaid medical costs are only 2 percent of all medical costs, a small multiple of the amount Reid admits could be saved from tort reform. (Tort reform would cut the wealth of trial lawyers, who are some of the biggest supporters of the Democratic Party.) In reality, tort reform would save far more than $54 billion.

The Pacific Research Institute estimates that just one type of cost that could be reduced through malpractice-lawsuit reform — defensive medicine — costs around $200 billion annually (which is almost as much as France spends annually on health-care for all of its citizens; France has no punitive damages, few lawsuits against doctors, and “loser-pays” rules).

One reform — setting up specialized health tribunals to hear malpractice cases — would be particularly helpful.  Using specialized health courts, rather than continuing to use uninformed juries, would provide more consistent rulings from case to case, eliminate meritless cases, reduce defensive medicine, and more speedily compensate injured people who truly are victimized by doctors’ carelessness. Such tribunals already exist in countries like “Sweden, Denmark, Finland, Iceland and New Zealand.”

Comprehensive tort reform would also reduce lawyers’ wages, resulting in some additional students choosing to go to medical school (where a critical shortage of doctors is projected over the next decade) rather than to law school (there are already too many lawyers, who sometimes can make work for themselves by bringing “creative” lawsuits).  At least two of my law school classmates had already gone to medical school before going to law school (one decided to become a medical malpractice lawyer). At least a dozen that I know of had considered going to medical school instead.  But life is easier as a lawyer, and you don’t get sued as much if you are a lawyer rather than a doctor.   As long as professionals like lawyers get paid a lot, doctors will have to be, too — greater “wage inequality” in the U.S. means that we have to pay doctors more than other countries do to get the same number of people to become doctors.  (The looming shortage of doctors is aggravated by arbitrary restrictions placed on highly-qualified immigrant doctors, who have to repeat their residencies all over again  in the U.S. even if they manage to immigrate to the U.S.)

Another reform opposed by Obama that would make health insurance cheaper would be to let people buy cheaper insurance across state lines, which an antiquated federal law now prevents.  Countries with cheaper health insurance permit national competition among insurers.

Martin Feldstein, one of Obama’s own advisors, has said that Obama’s health-care plan would explode the federal budget deficit and lead to “crippling deficits,” as well as “higher taxes, debt payments, and interest rates” that would cut America’s standard of living.  Feldstein also noted that Obama’s health-care plan would harm people with insurance, and predicted that it would lead to massive tax increases.  Other analysts have predicted that it will drive up medical costs and inflation.

Obama is relying on $2 trillion in imaginary savings to pay for his health care plan.   He is also relying on tax increases, which breaks Obama’s campaign promise not to raise taxes on the middle class.

Fact-checkers say Obama is lying about health-care.  CNN Money says ObamaCare would take away 5 freedoms.