The High Costs of (this kind of) Health Care Reform


The Small Business & Entrepreneurship Council recently pitted rhetoric against facts when it comes to big government health care reform. Sadly, it seems it’s the taxpayers and businesses who are losing in that fight. Read on:

Let’s consider the cost issue. Government programs like Medicaid and Medicare, for example, have run far ahead of what the original cost projections were. That’s not surprising. When the taxpayer is the funder, no one involved in the actual transaction – consumer, provider, politician, and bureaucrat – has any reason to care about prices or utilization. If cost concerns do come up – when politicians initially set up the program, or down the road when facing huge shortfalls and/or an inevitable taxpayer backlash – the usual action is a combination of price controls and rationing of care.

So, the results of more government in health care are both increased costs and diminished quality of care.

That’s all in the mix in the current debate over health care reform. But let’s just take a look at what politicians are talking about initially to fund more government care.

President Obama floats the figure of $630 billion over 10 years. But the Obama budget makes clear that the "$630 billion is not sufficient to fully fund comprehensive reform." In fact, estimates for the coming decade for the President’s plan range up to more than three times higher.

What possible tax increases are in the mix?

First, the President plans on limiting tax deductions for higher income earners, many who happen to be investors and entrepreneurs. President Obama also proposes a variety of other costs largely focused on business, including jacked up tax enforcement, repealing the LIFO accounting method, and higher death taxes.

On May 20, the Senate Finance Committee came up with a long list of possible tax hikes to pay for health care "reform." One would limit the tax deduction for employer-provided health care plans. That, of course, would increase costs for employers and/or workers.

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