Green Room

ObamaCare projected to cost more than doing nothing

posted at 9:36 am on July 29, 2011 by

Promises, promises, promises. President Obama promised the passage of the Affordable Care Act would lower health care costs across the board, making health care “more affordable”. The entire premise of the massive government intrusion in that market was to lower costs and make insurance more affordable.

A new study says that doing nothing would actually have been slightly less expensive. The irony is this isn’t some opposition think tank which has put up these numbers but the Centers for Medicare and Medicaid Services:

Despite President Obama’s promises to rein in health care costs as part of his reform bill, health spending nationwide is expected to rise more than if the sweeping legislation had never become law.

Total spending is projected to grow annually by 5.8 percent under Mr. Obama’s Affordable Care Act, according to a 10-year forecast by the Centers for Medicare and Medicaid Services released Thursday. Without the ACA, spending would grow at a slightly slower rate of 5.7 percent annually.

The primary reason, supporters say, is more people will have insurance.

CMS officials attributed the growth to an expansion of the insured population. Under the plan, an estimated 23 million Americans are expected to obtain insurance in 2014, largely through state-based exchanges and expanded Medicaid eligibility.

The federal government is projected to spend 20 percent more on Medicaid, while spending on private health insurance is expected to rise by 9.4 percent.

Anyone – do you know why “private health insurance costs” are expected to rise by 9.4%? Because the privately insured will be tapped to help pay the difference between what an expanded Medicaid base pays and what doctors charge. Or, in other words, they will be the victim of government intrusion and market distortion. And of course government is then going to point to the costs its distortion caused and claim it should help solve the problem it has created. And what will be eventual answer to those increased costs caused by government distortion be? Single-payer, of course.

This study doesn’t address the other real problem – you may expand Medicaid dramatically, but having that insurance doesn’t guarantee seeing a doctor. Other studies have shown that increasing the insurance base doesn’t decrease emergency room use, but instead increases it in the face of a building doctor shortage. And then, of course, there are those doctors who simply won’t take Medicaid (or any more than they now have) because of the low reimbursement rate.

So when the White House’s Nancy-Ann DeParle says:

“The Affordable Care Act creates changes to the health care system that typically don’t show up on an accounting table,” she said. “We know these new provisions will save money for the health care system, even if today’s report doesn’t credit these strategies with reducing costs.”

She’s also leaving out that part of the problem that doesn’t “show up on an accounting table” as well.

Bottom line, we were sold a lemon, a bill of goods, snake oil. All the ACA does is give the government a legal ability to intrude deeper and deeper in a market it really has no business being in at all and to distort that market even further. And that’s precisely what is going to happen. We all know that when government gets in as deep as it will be in this market, nothing ends up “costing less”.

Bruce McQuain blogs at Questions and Observations (QandO), Blackfive, theWashington Examiner and the Green Room.  Follow him on Twitter: @McQandO

 

 

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Promises, promises, they knew they’d never keep.
http://www.youtube.com/watch?v=vWNJlc-IylY

AH_C on July 29, 2011 at 10:56 AM

What a clusterf*ck.

Get government out of the healthcare business, period.

AZCoyote on July 29, 2011 at 11:10 AM

Anyone – do you know why “private health insurance costs” are expected to rise by 9.4%? Because the privately insured will be tapped to help pay the difference between what an expanded Medicaid base pays and what doctors charge. Or, in other words, they will be the victim of greater government intrusion and market distortion.

FIFY. Cost-shifting on this premise has been driving the price of private insurance up for years. Most people don’t understand that we already do this. Obamacare will amplify the existing effect rather than introducing a new one.

We need to reform Medicare, and the Ryan plan is a good start. But we also need to undo the network of entrenched regulations and bureaucrats in the 50 states, which is the main thing forcing everyone into the one-size-fits-all health-plan “insurance” scheme on which the cost-shifting is predicated.

J.E. Dyer on July 29, 2011 at 3:28 PM