Economist William Anderson refutes the oft-repeated fallacy that Obamacare will somehow “cut costs” in the delivery of medical care in this Freeman article.
According to the Congressional Budget Office, Obama’s plan will produce “savings” in medical procedures. Not surprisingly, much of the media (and especially the New York Times), has been echoing the same chorus.
However, I think this claim truly falls into the “Not So Fast” category. In my view there is no possibility that the President’s plan will even remotely cut real costs. The true legacy of this bill will be to add costs in ways we hardly can imagine.
Given that the bill imposes new mandates, further subsidizes the consumption of medical services, and orders insurance companies to cover applicants no matter their health status, one is hard-pressed to find the “cost savings.” Medicare will supposedly cost half a trillion dollars less because the government will order such a state of being into existence. The “waste, fraud, and abuse” that every preceding administration promised to root out will finally meet their match with the Obama administration.
For example, if the government forces down the price of a medical procedure below the level at which all service providers can be adequately compensated, then the procedure won’t be done at all. While that would mean no money outlays, “officially” lowering costs, the person for whom the procedure is denied would bear a real cost by having to suffer the malady that drove him or her to the doctor in the first place.
The current health care “reform” proposals are not about expanding access to care or cutting costs, but about a pure power grab by politicians to exercise further control over a major portion of our economy and some of the most important decisions in our lives.