December 9 2009
IWF in the News: This Health Bill Will Raise, Not Lower, Health Care Spending
Carrie L. Lukas
A December 8th Associated Press item by David Espo reports:
At its core, the legislation would expand health care to millions who lack it, ban insurance companies from denying coverage on the basis of pre-existing medical conditions and rein in the rise of health care spending nationally.
The first two items are fine, but the last assertion on cost control is just plain false. Much of the media bought Democrats spin that the recent Congressional Budget Office analysis of the Senate bill showed that proposed health care changes are somehow fiscally responsible. Yet what the CBO actually reported was that if all of the measures are fully enacted (including hundreds of billions of dollars in cuts to Medicare spending) then the legislation would reduce the deficit. But only because the legislation would raise revenue (mostly through higher taxes) to cover the larger bill. The CBO writes:
In the decade after 2019, the gross cost of the coverage expansion would probably exceed 1 percent of gross domestic product (GDP), but the added revenues and cost savings would probably be greater.
In other words, the costs associated with expanding coverage are more than 1 percent of GDP, which means we will be spending more, not less, on health care. You hardly need to read through a CBO report to understand that extending health insurance to another 30 million people, and creating requirements for what must be covered under all insurance policies, is an expensive under-taking.