October 28, 2013

Obamacare costs will not be neutral

CNN today has an article about the 'real story' behind what will actually happen with government spending as a result of Obamacare and tries to come down on the side that it might help a little.  In 1965, the government projected costs of Medicare/Medicaid and it was grossly underestimated. 
It's pointless to re-fight this battle with the press, but here's an excerpt from an article in American Thinker (2009) to keep in mind when you hear these claims about Obamacare decreasing costs over time.  The main point - those claims are false.
It is naïve to believe that increased government intervention will lower the cost of medicine. All past evidence indicates that the reverse is true. In 1965, the government promised that Medicare part A would cost $9 billion> by 1990. The actual cost was more than $66 billion -- over seven times projected costs. There has never been a single large federal social program that has come in at budget or has performed as predicted.

Democrats have tried to pin the rising cost of medical care on the private sector. It is, however, government interference and government regulations that have caused the high cost of medical care in the past and that will continue to increase the costs of medical care in the future. Medicare increases the cost of medical care by shifting federal administrative overhead to the private sector and through oppressive regulation.[i] These practices will undoubtedly accelerate under "Obamacare" as the following chart, using data from the Congressional Budget Office, indicates:

 The estimated $1.6 trillion for Obama's proposed legislation will cover only about one third of his claimed 45 million uninsured. If historical precedents and evidence are any indication, the actual costs of the plan could be seven times higher than this estimate. Adding to the fiscal nightmare, Mr. Obama is planning on benefits for Medicare and Medicaid in order to transfer funding to his new health plan. This is another example that government does not contain costs, but shift costs from one program to another.

The effect of Obama's program will be to increase taxes on small businesses and further worsen unemployment. This loss of jobs will result in driving people into the government-funded plan. Increasing the costs of the plan would create a vicious cycle of unemployment, increasing costs, rising taxes, and unending dependence on government.
If it didn't curtain costs but rather increased them instead, what evidence do Democrats offer that this time it will be different?  Or maybe they don't need credible evidence - after all they have Obama's word on it.  And you can always keep your existing plan anyway - Obama has said so.

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