Exposing the Lack of Fiscal Sense in Obama’s Fanciful Health Care “Plan”

Obama’s health care plan is losing support because its avowed premise of saving costs makes no sense to an increasing number of Americans suspicious of too many new federal programs in the midst of a highly unstable economic environment.

Let’s take one Obama promise: He claims that the proposed federal plan will benefit financially because we’ll all save money when the formerly uninsured won’t need to go to emergency rooms any longer for every ailment. Supposing that’s true, how does money that’s not spent somehow end up converted to money earned? The money saved won’t be converted into government revenue. Money not spent at an ER in Indianapolis or Spokane or Albany isn’t going to be collected and dropped off in federal coffers. (Or am I missing some step here? Please refute me if you think I’m missing something.) Take the story of a hospital in Massachusetts, which has had a mandated health care plan for all citizens since 2006:

A hospital that serves thousands of poor residents sued the state last week, charging that the 2006 law forces the hospital to cover too much of the expense of caring for the poor. The hospital, Boston Medical Center, said it faced a $38 million deficit in this fiscal year and will lose more than $100 million next year because the state has lowered Medicaid reimbursement rates and changed other rules.

Aha! These government plans are stripping hospitals of needed reimbursements and, in the case of the proposed federal plan, I have a hunch will dump the bill on each state’s Medicaid and other health assistance plans, piling on bigger deficits for already cash-strapped state budgets.

Above, I quoted from a Chicago Tribune editorial, “Got an aspirin?,” which uses the example of Massachusetts’ health care plan to demonstrate how much a well-intended plan can suck up government money and add greater burdens on health care providers, and how the plan’s administrators are backtracking on major components of the 2006 plan:

House Democratic leaders trotted out their $1 trillion-plus health-care plan last week, including all sorts of ways they hope to control costs . . . much later.

But first, they say, all Americans must be covered by health insurance.

For inspiration, the Democrats borrowed heavily from Massachusetts’ pioneering 2006 law, which did much the same thing: It mandated that everyone be covered, imposed fines on those who refused to buy insurance and offered subsidies for those who couldn’t afford it.

Massachusetts also punted on any notion of taming health-care costs.

Before lawmakers in Washington start dickering over a final Massachusetts-like plan, they might want to ask: How’s it working for Massachusetts?

Got an aspirin?

Health-care costs are so out of control in the Bay State that the governor just cut coverage for some 30,000 legal immigrants to close a growing deficit. That should save the state about $130 million. The state is also banking $63 million by no longer automatically enrolling low-income residents in health coverage if they fail to do so themselves.

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Beyond the budget crisis, there is evidence that the state mandate for all residents to buy insurance isn’t working exactly as planned either.

One major insurer, Harvard Pilgrim Health Care, reports that there has been a spurt in the number of people who buy coverage for a few months at a time, run up high medical bills, then dump the policy after the treatment is finished and the bills are paid by the insurer. The state tries to discourage that, but apparently the penalty for not having coverage is too low — about $1,000 — so people game the system. That deprives insurers of the premiums they need to pay bills and drives up costs of premiums for everyone else.

If the mess in Massachusetts isn’t enough to sober Democratic leaders, then how about the assessment of Congress’ chief budget analyst? On Thursday, Congressional Budget Office chief Douglas Elmendorf warned that the House Democratic health plan and similar measures still in Senate committees do not propose “the sort of fundamental changes” necessary to restrain the soaring costs of government health programs. Just the opposite: They make red-ink budget projections worse. …

Yes, yes, yes. We need to do something about health care in this nation. And, yes, yes, yes. No plan is ever perfect, and flaws can be found in any plan.

But, given the current state of our national deficit and failing economy, as well as high unemployment, we need to stabilize the economy and get more people back to work first. Then, and only then, we can carefully study various systems and work out an efficient and fair health care system that is supported by a stable economy.