CBO: ObamaCare bends the cost curve upward

A little-noticed analysis by the CBO last week showed that rather than controlling costs in the near- and long-term, ObamaCare does nothing to change the upward pressure on medical costs.  In fact, as Keith Hennessey argues in a guest column at Business Insider, the bill in combination with the anticipated “doc fix”, it will substantially worsen the situation.  CBO chief Douglas Elmendorf obliterates the Obama administration’s argument that the health-care cost issue was at the heart of the deficit crisis in the first place, emphasis mine:

The projected reductions in budget deficits and in the federal budgetary commitment to health care during the decade beyond the 10-year budget window are steps in the direction of sustainable fiscal policy. However, they are small steps relative to the length of the journey that will be needed to achieve sustainability. If the tax cuts enacted in 2001 and 2003 are extended, the alternative minimum tax is indexed for inflation, and no other changes are made to current laws regarding taxes and spending, the budget deficit in 2020 would be about 6 percent of GDP and rising. Because federal health care programs make up a large share of the federal budget, putting that budget on a sustainable path would almost certainly require a significant reduction in the growth of federal spending on health care relative to the amounts projected under current law (including this year’s health legislation).

In considering the opportunities for achieving that reduction in spending growth, there are grounds for both optimism and pessimism. On the upside, there is considerable agreement that a substantial share of current spending on health care contributes little if anything to people’s health, and providers and health analysts are making significant efforts to make the health system more efficient. On the downside, it is not clear what specific policies the federal government can adopt to generate fundamental changes in the health system; that is, it is not clear what specific policies would translate the potential for significant cost savings into reality. Moreover, efforts to reduce costs substantially would increase the risk that people would not get some health care they need or would like to receive.

Hennessey highlights another passage from Elmendorf:

Rising health costs will put tremendous pressure on the federal budget during the next few decades and beyond.  In CBO’s judgment, the health legislation enacted earlier this year does not substantially diminish that pressure.

Gee, perhaps the CBO could have told us that in March, when it might have made a difference.

Meanwhile, the Obama administration has decided to start attacking doctors who balk at compensation cuts through the Department of Justice rather than the FTC, apparently wanting to keep options open for criminal prosecution:

As I’ve long suspected, “health care reform” has emboldened the Justice Department to take a more active role in enforcing government price controls against physicians. Today the Antitrust Division, joined by Idaho Attorney General Lawrence Wasden, forced a a group of Boise orthopedists to accept price controls for worker’s compensation and HMO contracts as part of a settlement accusing the doctors of “price fixing” …

This case is a watershed for two reasons:

First, until now the Federal Trade Commission, not the Justice Department, has taken the lead in prosecuting physicians. Since 2000, the FTC has brought about three dozen cases against physicians (all but one of which settled without any trial). But the FTC only has civil and administrative jurisdiction; the Antitrust Division has civil and criminal jurisdiction. The Sherman Act makes no distinction between civil and criminal “price fixing,” so in a case like this, it’s entirely a matter of prosecutorial discretion whether to charge the doctors with a civil or criminal offense.

Based on the descriptions in the Antitrust Division’s press release, there’s certainly no reason they couldn’t have prosecuted the doctors criminally and insisted upon prison sentences — and there’s little doubt such threats were made or implied to obtain the physicians’ agreement to the proposed “settlement.”

The second reason this is a landmark case is that the Justice Department has unambiguously stated that refusal to accept government price controls is a form of illegal “price fixing.”

For more on this, be sure to read Laura Curtis’ post in the Green Room.  This move comes at the same time that the Medicare compensation rates got cut 21%, an effect of the delay Democrats have had in pushing the “doc fix” they promised the AMA in exchange for support of ObamaCare.  The “doc fix” will make ObamaCare even more of a cost amplifier than the CBO figures it is at the moment (they calculated costs with the scheduled compensation cuts remaining in place).  Where is the AMA on this escalation of punitive measures towards dissenting doctors after its sellout to the White House on ObamaCare?

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