Health Care Lunacy Begins

Indeed, no one really knows exactly what lies in these thousands of pages of legislation, and no one knows how all the various provisions will affect health care and the economy in general. But it is unlikely that this odd collection of provisions will work as we've been told it will. For example, it turns out that the provision requiring insurers to insure children without regard for pre-existing conditions was badly written -- sufficiently so that there's considerable confusion as to exactly what it does say. Badly written? Who could ever have imagined? But that's OK; the White House is pressuring insurers to act in accord with what the White House wishes the legislation said. We'll fix the actual writing later. (This has me wondering why it was ever necessary to go through the lengthy and divisive process of getting the bills passed in the first place. Why not just have the White House pressure everyone into doing what it wants?)
Also, since the bill raises insurance costs for some firms and imposes new taxes, this has affected their long-run financial projections. AT&T recalculated, and ended up showing a $1 billion loss from the bill; other corporations have similar results. Therefore, the White House has publicly condemned them as "irresponsible", and Democrats in Congress are calling them into hearings to threaten them. After all, CBO projections showed that the legislation would reduce federal deficits, so why isn't everyone showing positive net revenues? I'm not sure how the financial geniuses in the White House and Congress supposed deficits could be reduced if this didn't raise funds from somewhere; did they really think this is an entirely free lunch?
In fact, though, we're not on the road to reducing deficits. There have been three health care bills passed and signed recently. The CBO analysis that finds that health care reform reduces the deficit is based on only two of them, H.R. 3590 and H.R. 4872. When the third one (H.R. 3961) is included, the trio raises projected deficits over the next ten years. Now there are no doubt good reasons to ask what each piece of legislation does separately. But there's no excuse at all for Barack Obama, Nancy Pelosi, and Harry Reid to crow that they've started us down a road to fiscal responsibility. To the contrary, our deficits are projected to worsen because of the entire package of health care legislation. And it's unlikely that the health care reform will unfold as they claim it will. It does nothing to stop the growth of health care costs. It does impose new costs on hospitals (federal payments to hospitals for covering the uninsured in emergency rooms are cut in order to help make insurance subsidies deficit-neutral). In a public radio interview, a spokesman for a hospital association lamented they are unsure how to budget for this, as the drop in federal revenues is expected to be much greater than the reduction in costs of treating the uninsured. It's not at all unlikely that congress will end up increasing subsidies and spending, once the new laws really kick in and the political pressure hits. The budget deficits are almost certainly going to be worse than projected.
We've been pushed down the rabbit hole of government health care by mad hatters Obama, Pelosi, and Reid. "Tea party" takes on a whole new meaning.
This article originally appeared on the
Hillsdale-econ.com blog, a
new forum for the expression of economic ideas by professors Charles
Steele and Gary Wolfram of Hillsdale College.
Dr. Charles N. Steele is the Herman and
Suzanne Dettwiler Chair in
Economics and assistant professor at Hillsdale College in Hillsdale,
Michigan. His publications include papers on the Soviet economy and
economics of transition, economic growth, and institutional change. He
received his Ph.D. in economics from New York University in 1997, and
has subsequently taught economics at the graduate and undergraduate
levels in the People’s Republic of China (China Agricultural
University), the Russian Federation (Moscow State University), Ukraine
(Economics Education and Research Consortium, National University
Kyiv-Mohyla Academy), and the United States (Montana State University).
He has also worked as a private consultant in design and review of USDA
crop insurance programs with Watts and Associates, Inc.
In addition to economics, Steele's interests include trail running, mountaineering, snowshoeing, and similar outdoor pursuits. He's completed 26 ultramarathons, ten triathlons, and is a nine times finisher of The United States' oldest 50 mile race, the Le Grizz Ultramarathon.
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