GOP health-care reform cost: $61 billion, cut deficit $68 billion
posted at 10:55 am on November 5, 2009 by Ed Morrissey
CBO director Douglas Elmendorf scored the new proposal from House Republicans on health-care reform and gave them plenty of ammunition to use against expansive and expensive Democratic plans for government takeovers. Their plan, which relies on interstate competition, HSAs, and tort reform, would only cost $61 billion in the first ten years of the plan — or slightly less than 6% of what Democrats plan to spend to overhaul the entire system:
This evening, CBO released a preliminary analysis of a substitute amendment to H.R. 3962, the Affordable Health Care for America Act, proposed by Representative John Boehner, the Republican Leader in the House of Representatives. CBO and the staff of the Joint Committee on Taxation (JCT) estimate that the amendment would reduce federal deficits by $68 billion over the 2010-2019 period; it would also slightly reduce federal budget deficits in the following decade, relative to those projected under current law, with a total effect during that decade that is in a broad range between zero and one-quarter percent of gross domestic product.
Unlike the Democratic proposals, the bill would actually reduce premiums:
CBO anticipates that the combination of provisions in the amendment would reduce average private health insurance premiums per enrollee in the United States, relative to what they would be under current law-by 7 percent to 10 percent in the small group market, by 5 percent to 8 percent for individually purchased insurance, and by zero to 3 percent in the large group market. Those are averages, however, and they are subject to a great deal of uncertainty; some individuals and families in each market would see different results.
Compare this to what Democratic Rep. John Yarmuth told Fox News earlier this week:
Premium costs will still go up under ObamaCare, and Yarmuth neglects to mention one thing about the costs. Prices may drop — may — relative to what they would be without federal intervention, but the federal intervention costs a lot of money, too. We’ll all be paying for that in taxes and fees assessed to insurers, providers, and innovaters in the pharmaceutical and medical-device industries. We just won’t see those costs directly. It’s a shell game that Yarmuth and the Democrats are playing.
Susan Ferecchio has more at the Washington Examiner:
The CBO put the price tag for the GOP plan at $61 billion, a fraction of the $1.05 trillion cost estimate it gave to the House bill that lawmakers are set to vote on this weekend. And the CBO found that the Republican provision to reform medical malpractice liability would result in $41 billion in savings and increase revenues by $13 billion by reducing the cost of private health insurance plans. …
According to CBO, the GOP bill would indeed lower costs, particularly for small businesses that have trouble finding affordable health care policies for their employees. The report found rates would drop by seven to 10 percent for this group, and by five to eight percent for the individual market, where it can also be difficult to find affordable policies.
The GOP plan would have the smallest economic impact on the large group market that serves people working for large businesses that have access to the cheapest coverage. Those premiums would decline by zero to 3 percent, the CBO said.
For the 87% of Americans who have insurance and who overwhelmingly like the system, this is a much better prescription for real cost savings, and without the heavy government intervention that threatens the liberty and economic stability of Americans. The only people disadvantaged by this plan are those pursuing ObamaCare out of ideological animus towards the private market.
Update: Getting a lot of heat for my last sentence on Twitter. The truth is, though, that there are only somewhere between 11 million and 14 million people without coverage due to poverty, and this would gain coverage for somewhere between 20%-25% of those. It’s also not our responsibility to provide health insurance to the masses; that would be a choice, not a duty. Over half of the uninsured are satisfied with their position and their care, which is different from insurance. And comprehensive insurance is the biggest problem with health-care costs in America, anyway. Spending a trillion dollars to address a nearly nonexistent problem makes it clear that it’s a screen for another agenda completely.
Update II: Ezra Klein argues that this shows the superiority of the Democratic plan, which covers more people (about 30 million) and “saves $36 billion more than the Republican plan.” However, that Democratic plan doesn’t include the costs of the “doctor fix”, which apply to the Democratic bill because they use Medicare and Medicaid to expand coverage — which is why the Democratic plan will not save any money at all. But let’s say for a moment that we accept that number. Why would we spend an additional $1 trillion to “save” another $36 billion? That would be a waste of 97% of the expenditure.
The Democratic plan “saves” money by playing around with pricing (and ignoring their parallel compensation boost), not through actual savings, and even those savings expire in the second decade.