Does Health Care Reform = Larger Deficits?


If you listen to President Obama, he will tell you that health care reform is essential from an economic point of view to help control the future federal deficit.  Health care reform is certainly important but it must be done right. That means find real meaningful ways to control costs at the point of service.  The cost of health care, the real cost, not the administrative costs, or insurance company costs, but the cost of care which is a combination of the cost per unit of care, i.e. the cost of an office visit and the number of units used, how many office visits or hospital admissions or CAT scans. 

However, we do not seem to be heading in that direction.  In a June 15 letter to Senator Kennedy, the Director of the Congressional Budget Office says, “According to that assessment (the one performed by the CBO), enacting the (health reform) proposal would result in a net increase in the federal budget deficits of about $1.0 trillion over the 2010-2019 period.” 

These are preliminary estimates, the legislation is far from final and the estimate does not include some additional mandates on health care. Some revised predictions place the cost at $1.5 trillion over the ten-year period.  In the same letter to Senator Kennedy, the CBO director says the net decrease in the uninsured would be about 16 million.  They also estimate a decline in the number of people covered by employer plans by 15 million. 

Health care reform is going to happen in a form yet to be defined, but in our haste to get something done, we are missing the crucial point.  It is not the lack of coverage that is the problem; it is the cost of the care provided at the point of service.  Every issue we have flows from that, except perhaps the health status of the American people and correcting that is a very long term effort generating few if any savings within the next ten years.

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