HHS: ObamaCare would make costs go up

posted at 12:15 pm on October 22, 2009 by Ed Morrissey

Does the official HHS website include their latest study of ObamaCare along with their propaganda linksNot 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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Comments

Duh. That’s what happened in MA.

lorien1973 on October 22, 2009 at 12:17 PM

From the Desk of the President:

Note to self… add HHS to enemies list.

mankai on October 22, 2009 at 12:17 PM

Surprise!

Christian Conservative on October 22, 2009 at 12:18 PM

the hell you say…!

ted c on October 22, 2009 at 12:19 PM

Government economic experts are racist!

rbj on October 22, 2009 at 12:20 PM

Somebody’s packing their desk up over this report.

kingsjester on October 22, 2009 at 12:21 PM

No surprise there. Go to any emergency room in Canada on a Saturday or Sunday and you’ll find that half the people there are parents with young children with the sniffles. Does the child need to see a doctor? In most cases, no. But hey, why take a few hours off work to take your kid to your doctor when it’s the “same price” to take Junior to the emergency room on your off days?

ProfessorMiao on October 22, 2009 at 12:22 PM

The nubmer of uninsured will go up. The people who now are purchasing insurance will be priced out of the market. The only people with insurance in the future will be the ones getting the rebates paid out by Uncle Sam or getting Medicaid and Medicare.

bopbottle on October 22, 2009 at 12:23 PM

WH: Sure costs will skyrocket, but they will not skyrocket as quickly as they would if we didn’t do anything.

WH: Sure unemployment is going up, but…

WH: Sure the deficit is rising, but…

mankai on October 22, 2009 at 12:24 PM

“The press corps will mostly ignore all of this because it is complicated and boring policy, as opposed to the epic drama of Anita Dunn vs. Glenn Beck.” — WSJ, 10/21/09

Thanks as always, Ed, for your laser focus on all these complicated and boring policy issues…that really matter.

publiuspen on October 22, 2009 at 12:24 PM

publiuspen on October 22, 2009 at 12:24 PM

Bolding indicates sarc of course.

publiuspen on October 22, 2009 at 12:25 PM

Newly insured people will seek medical care.

These blindingly obvious facts are obviously racist.

NoDonkey on October 22, 2009 at 12:25 PM

Ed, thanks for telling me what to think. /sarc off

WashJeff on October 22, 2009 at 12:25 PM

Zero is not losing any sleep over this.

VegasRick on October 22, 2009 at 12:25 PM

WH: Sure costs will skyrocket, but they will not skyrocket as quickly as they would if we didn’t do anything.

WH: Sure unemployment is going up, but…

WH: Sure the deficit is rising, but…

mankai on October 22, 2009 at 12:24 PM

It must be Bush’s fault.

VegasRick on October 22, 2009 at 12:27 PM

Obamacare is all about my freedom of choice. My health care costs will actually go down. Instead of having to pay increased premiums for my son’s pre-exisiting conditions, everyone else will be picking up the tab.

Bleeds Blew

rukiddingme on October 22, 2009 at 12:28 PM

The cost of everything will go up. The increasing debt and the printing of money will make Carters inflation look like chup change.

stephana on October 22, 2009 at 12:28 PM

Wonderful. Medicare Advantage Deluxe (or its equivalent) goes to $860/month (currently $285), and a new tax on employer-provided health insurance of $8,000 for an individual and a whopping $17,000 for a family of 4 with dual incomes.

BAH!

jay12 on October 22, 2009 at 12:30 PM

The main reason: Newly insured people will seek medical care.

Yes and for ridiculous stuff that they’d normally handle at home with a 100% success rate. After all, since they’re being soaked for it, they might as well use the hell out of it.

csdeven on October 22, 2009 at 12:31 PM

Who said HHS could hire PriceWaterhouseCooper? What, they didn’t? Then how could they come up with the same result? Something is clearly wrong; the evil insurance executives must have paid the HHS staffers to do this. Or maybe the evil, greedy doctors, or maybe the evil, greedy __________fill in the blank…

txmomof6 on October 22, 2009 at 12:31 PM

“Shut up, ” Obama explained.

PackerBronco on October 22, 2009 at 12:32 PM

MSM Headline: ObamaCare Would Make Costs Go the Opposite of the Reverse of Not Down

LibTired on October 22, 2009 at 12:32 PM

Costs will go UP
Quality will go DOWN
Government control of the electorate will go UP
Choices will go DOWN
Bureaucratic red tap will go UP
Personal freedom will go DOWN
Rationing will go UP

What’s not to Hate about this plan?

Juno77 on October 22, 2009 at 12:33 PM

Higher costs for more hassles and less actual health care? Sign me up!

Monica on October 22, 2009 at 12:33 PM

It is all about government control not health care.

d1carter on October 22, 2009 at 12:34 PM

MSM Headline: ObamaCare Would Make Costs Go the Opposite of the Reverse of Not Down
LibTired on October 22, 2009 at 12:32 PM

That sounds Double,double,double plus ungood.

Juno77 on October 22, 2009 at 12:35 PM

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.

It’s interesting how people often talk about “health care spending” without detailing the difference between public spending and private spending. The Precedent’s plan (supported by treasonous dems and other morons) would work to move this spending all to the government, speaking about it, now, as if it is all government spending, already (talking about health care spending and the deficit).

It is very distressing to see this intentional confusion (impeacheable when done by The Precedent) played over and over in health care talk everywhere. They are trying to condition people to think as if the government is already paying for all the health care costs in the US. This treacherous insanity must stop.

progressoverpeace on October 22, 2009 at 12:35 PM

More people and covering pre-existing conditions means bad things for all of us.

Trent1289 on October 22, 2009 at 12:37 PM

What a freakin surprise.

rjoco1 on October 22, 2009 at 12:38 PM

The proper route for reform would remove pricing opacity and rely on consumers to make rational choices on health care.

Next time you’re at the doctor’s office, try to find out how much something costs. My wife tried to find the cost of a mammogram; no one in the office had a clue. I tried to find out what a cholesterol test cost. After a 20 minute wait, they came back and told me to call the laboratory for the costs. It appears that no one knows the costs until the various bills come due and it all percolates to the doctor’s billing office.

Do doctors even shop around for the best deals on labs or other costs? Is there any incentive to do so?

This is crazy. The very existence of insurance today warps the market since there appears to be a wall between the patient (and the possibly the providers) and what the costs are. It makes no sense.

karl9000 on October 22, 2009 at 12:39 PM

People,people, people, it won’t go up. Did the acuaries factor rationing into their analysis?

NickelAndDime on October 22, 2009 at 12:40 PM

Buuuuuush, bush, bush, bush Cheney! Buuuuush, bush, bush, bush, Palin! Buuuuuush, bush, bush, bush, Rush! Buuuuuush, bush,bush, bush, Beck!

NickelAndDime on October 22, 2009 at 12:42 PM

Costs will go UP
Quality will go DOWN
Government control of the electorate will go UP
Choices will go DOWN
Bureaucratic red tap will go UP
Personal freedom will go DOWN
Rationing will go UP

What’s not to Hate about this plan?

Juno77 on October 22, 2009 at 12:33 PM

But they mean well. Doesn’t that matter at all to you?

mankai on October 22, 2009 at 12:44 PM

Buuuuuush, bush, bush, bush Cheney! Buuuuush, bush, bush, bush, Palin! Buuuuuush, bush, bush, bush, Rush! Buuuuuush, bush,bush, bush, Beck!

NickelAndDime on October 22, 2009 at 12:42 PM

HALLIBURTON!

mankai on October 22, 2009 at 12:44 PM

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.

Bingo!

lovingmyUSA on October 22, 2009 at 12:45 PM

Costs will go UP
Quality will go DOWN
Government control of the electorate will go UP
Choices will go DOWN
Bureaucratic red tap will go UP
Personal freedom will go DOWN
Rationing will go UP
What’s not to Hate about this plan?
Juno77 on October 22, 2009 at 12:33 PM

But they mean well. Doesn’t that matter at all to you?
mankai on October 22, 2009 at 12:44 PM

In a word, H*ll NO!!!
(Okay, that’s two)

Juno77 on October 22, 2009 at 12:49 PM

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.

Don’t worry, the Dems will fix it. I’m a huge fan of the latest parlor tricks 1) Secondary bills to hide costs 2) Mismatching Tax Years (10) from Benefit Years (7) as in the Baucus bill. It’s F***ing us in such creative ways, I’m sure it’s in spirit of lawmaking that the Founders intended!

NickelAndDime on October 22, 2009 at 12:51 PM

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.

Gee, No Sh*t sherlock, if people think they’re getting a virtual freebie, they’ll come out of the woodwork.

It’s to stunningly obvious for the left-twits to even understand.

Juno77 on October 22, 2009 at 12:51 PM

Do doctors even shop around for the best deals on labs or other costs? Is there any incentive to do so?

This is crazy. The very existence of insurance today warps the market since there appears to be a wall between the patient (and the possibly the providers) and what the costs are. It makes no sense.

karl9000 on October 22, 2009 at 12:39 PM

The direct billing of third parties for medical care has torn down the medical ‘marketplace’. Doctors can’t know what (and when) they will be paid because Medicare/Medicaid and major medical insurers routinely dictate contract terms and prices…and then break the contracts when it becomes inconvenient for them to pay what they agreed to. This forces medical providers to over-bill and/or ‘game’ the billing system, and the fraud spreads over the whole system like a cancer. No surprise that Medicare/Medicaid (government) is heavily involved in causing this.

To unwind this mess, we have to not only insist that prices be posted, but also insist that providers be paid as agreed.

landlines on October 22, 2009 at 12:53 PM

We’ll have healthcare a la the DMV.
Here is liberal hell they are adding a vehicle tax to build a bridge. The costs for registering vehicles here is already pretty high but less than CA so people are grateful (dumb).
I can not help it but thinking of healthcare like any other government entity, how can costs NOT skyrocket?

ORconservative on October 22, 2009 at 12:54 PM

Duh. That’s what happened in MA.

lorien1973 on October 22, 2009 at 12:17 PM

Exactly One only need to see what’s going on in MA. It is a disaster.

bazil9 on October 22, 2009 at 12:55 PM

Ideology over rational policy is exactly the case. And the logic at the core of the ideology? Control the masses, and their money, regardless of the benefits to the peons.

But never mind, Odinglenuts is going to continue to tell us that up is down, and expect that we’ll be so over-awed by his rather predictable speeches and blue lips that we’ll believe it. It seems he’s impervious to reality.

mr.blacksheep on October 22, 2009 at 1:07 PM

If it’s so great, put EVERY Federal Employee on the plan.

Jeff from WI on October 22, 2009 at 1:11 PM

The main message coming from Obama, and his ilk, is that so many are without health insurance, the insurance companies are greedy, and need to be knocked down a peg, or two. We also hear that, we need more affordable health care, so that we don’t have to give up our life savings, paying for extreme care, should something really bad pop up, with our health.

And all we’ve seen so far, is that the price for their crap is going to be so off the charts, we’ll all go broke, trying to keep up with paying for this. It’s a no brainer, and most of us know this. Why don’t they? Because IT’S NOT ABOUT HEALTH CARE!!!!!

capejasmine on October 22, 2009 at 1:11 PM

AT this point the administration doesn’t care about anything but getting a bill done. Someone declared it Waterloo and now they have to get anything through that they can.

That is what is behind all the suppression of opposition and the propaganda on the government sites.

They are trying to save Obama now. Healthcare is secondary.

petunia on October 22, 2009 at 1:15 PM

Perhaps it’s because the ObamaCare push has always been about ideology over rational policy.

Of course it has always been about control. That being said, I know exactly what the filthy lying coward would tell you. The overall cost goes up but that includes far more insured so, therefore, the cost of healthcare is cheaper even though it is more expensive. And if you don’t follow this line of reasoning you must be a racist or something.

highhopes on October 22, 2009 at 1:17 PM

HALLIBURTON!

mankai on October 22, 2009 at 12:44 PM

The favoritism shown the unions and GE should simply put any talk of Halliburton off the table forever.

Corruption your name is Democrat.

petunia on October 22, 2009 at 1:18 PM

Feature, not a bug.

daesleeper on October 22, 2009 at 1:22 PM

Next time you’re at the doctor’s office, try to find out how much something costs. My wife tried to find the cost of a mammogram; no one in the office had a clue. I tried to find out what a cholesterol test cost. After a 20 minute wait, they came back and told me to call the laboratory for the costs. It appears that no one knows the costs until the various bills come due and it all percolates to the doctor’s billing office.

Do doctors even shop around for the best deals on labs or other costs? Is there any incentive to do so?

This is crazy. The very existence of insurance today warps the market since there appears to be a wall between the patient (and the possibly the providers) and what the costs are. It makes no sense.

karl9000 on October 22, 2009 at 12:39 PM

So doctors don’t even know what things cost? That’s just great! No wonder cost keep going up!

Health savings accounts are a better option. We have one. And I keep being unhappy because we haven’t reached our deductible and keep having to pay out of the account… But I realized the other day that the money in the account is coming out of the pay check instead of going to insurance it is going directly to the doctor.

I have bargaining power and I didn’t realize it. I need to do more research on what things cost.

This is the direction medicine should go.

petunia on October 22, 2009 at 1:24 PM

They are trying to save Obama now. Healthcare is secondary.

petunia on October 22, 2009 at 1:15 PM

They’ve got to save the filthy lying coward because they’ve so painted him as the face of their party that they own whatever legacy he leaves. That’s why you get stupid statements about how the economy has turned around, how the stimulus is working, how legislatively successful this Congress has been…. Etc.

highhopes on October 22, 2009 at 1:27 PM

If this wretched system comes to pass, I fully intend to go Cloward-Pliven on them.

They’d better get used to seeing me down at the ol’ ObamaClinic.

Techie on October 22, 2009 at 1:31 PM

Well, the HHS isn’t really what a true government agency…all of the other government agencies should stop treating them as one.

…or that’s what Gibbs told me.

BlueCollarAstronaut on October 22, 2009 at 1:42 PM

Freaking Democrats live in fantasyland.

I wish I could have some of their drugs.

drjohn on October 22, 2009 at 1:46 PM

And of course, as with all federal welfare state programs, the HHS estimate for what Obamacare will actually cost ten years down the road is still probably under-shot at least by half.

Blacklake on October 22, 2009 at 1:56 PM

Freaking Democrats live in fantasyland.

I wish I could have some of their drugs.

drjohn on October 22, 2009 at 1:46 PM

Dr. John, it’s not paid for under Obama Care, only for the Federal employees.

hip shot on October 22, 2009 at 1:57 PM

THIS time they are going to be the people that make it work!

1+1=3

jukin on October 22, 2009 at 2:27 PM

The HHS probably underestimates the increased demand that will result from imposing comprehensive plans on everyone in the country.

They also don’t consider the reduced supply of doctors, as many will leave the profession and less people will enter it.

RadClown on October 22, 2009 at 2:38 PM

If you have any doubts about health reform being about ideology rather than rational policy, you need to compare these 2 videos from Robert Reich:

What an Honest President Would Say About Health Reform (2 minute video from 2007)

vs.

The Truth About Public Option (2 minute video 2009)

Which video do you think is more honest?

wren on October 22, 2009 at 2:41 PM

But I realized the other day that the money in the account is coming out of the pay check instead of going to insurance it is going directly to the doctor.

I have bargaining power and I didn’t realize it. I need to do more research on what things cost.

This is the direction medicine should go.

petunia on October 22, 2009 at 1:24 PM

Direct payments by responsible individuals bypassing insurance companies and cutting down on their evil profits. You would think the Dems would jump on it.

OK, except for the thinking part, and the individual part, the Dems would ju…

Oh, never mind.

karl9000 on October 22, 2009 at 6:22 PM

I have always carried health insurance amd with the inclusion of prescription coverage and computers, I am never able to price prescriptions with a pharmacy. They tell me they can only tell me when it is filled and billed. The computer does the brain work and charges whatever that particular company will pay. I had a new prescription filled and during the process learned that Medicare Part B paid their 80% and sent the info on to my secondary insurance to pay the balance. The pharmacy had trouble getting it set up and I asked what they would charge me if I just paid them cash and did not send for reimbursement. I was advised it would be $8.00 for a cash payment. About the time I decided to just pay for it, the pharmacy was able to resolve the billing problem and sent in for payment. Imagine my surprise when I got the Explanation of Benefits and learned that Medicare reduced payment for the $8.00 down to $6.20, but then paid the pharmacy an additional $33.00 for “dispensing” the medication. Isn’t there something wrong with this picture?

Oleta on October 22, 2009 at 8:09 PM

We all need to get in the habit of asking how much medical services cost every time we purchase them!

Until enough customers start asking about the costs, the providers will not have any incentive to provide a rational cost structure.

This is the best way to start to lower the cost of health care for everybody.

wren on October 22, 2009 at 8:41 PM