Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at intelligent and rational individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

"Observe that the 'haves' are those who have freedom, and that it is freedom that the 'have-nots' have not." Ayn Rand

"The virtue involved in helping those one loves is not 'selflessness' or 'sacrifice', but integrity." Ayn Rand

23 September 2009

Murdock - ObamaCare Costs will Float Up and Away

This is again an effort to catch up on an older article with important lessons for us all as we fight the Obama and Democrat Congress in their determined effort to replace the remains of our free market approach to health care with a 100% government micromanaged health care system.

Deroy Murdock did a review of predicted costs on 13 August 2009 for government health care programs and the actual cost as it developed over time later. Murdock notes:
According to a July 31 report from the Congressional Joint Economic Committee’s GOP staff, “major health care reform proposals have generally always cost more — sometimes significantly more — than the highest cost estimates published while the legislation was pending.”

As Congress debated the launch of Medicare in 1965, the House Ways and Means Committee calculated that Part A, the hospital entitlement, would cost taxpayers $9 billion in 1990. In fact, that year’s outlay was $67 billion, outpacing forecasts by 744 percent.

In 1967, Ways and Means predicted that the entire Medicare program would cost the Treasury $12 billion in 1990. Actual expenditure: $110 billion. That is 917 percent more than projected.

Congressional number crunchers reported in 1987 that Medicaid’s Disproportionate Share Hospital payments (cash for medical centers that primarily serve the poor and uninsured) would be about $1 billion, just five years later. In 1992, thanks to loopholes that states exploited to milk Uncle Sam, this narrow program exploded to $17 billion, 1,700 percent beyond what taxpayers were told to expect.
He goes on to note that the ObamaCare-like Massachusetts Commonwealth Care, launched in 2006, was supposed to cost $472 million in 2008, but it actually cost $628 million, an increase of 33%. The 33% increase is my calculated number, since Murdock's number is mistaken. The demand for such government programs is usually much underestimated, though a desire to get programs enacted clearly causes government's to systematically underestimate costs.

This is clearly illustrated by the Obama administration's suppression of the real cost per family of Waxman-Markey carbon cap and trade as the free initial carbon credits stop being free. Obama claimed a cost of $700 or so per family when the program is scheduled to cost more than $1761 per family in a few years time according to government estimates. The Heritage Foundation believes the cost will more realistically average $2,979/ year from 2012 to 2035!

Of course,
government lacks the profit motive, which generally forces private-sector managers to control costs, lest they get fired. Government bureaucrats lack such accountability and rarely get sacked. And when federal expenses zoom into the heavens, Congress orders a fresh round of greenbacks to be spent, which the Treasury obligingly prints.
To which I will add this observation. When a government program grows, there are rewards for the program managers in increased influence, power, and perhaps pay. The incentives to manage costs are not only not there, they are replaced by incentives to spend more and more of the taxpayers' money. This is a phenomena particularly apparent near the end of a fiscal year when equipment, supplies, and furniture purchases are madly made under the philosophy of "use it or lose it."

Murdock observes that the IRS says this fiscal year's individual income tax revenues are down 20.5%, while corporate tax revenues are down 58%! In July, the fiscal year 2009 had overall tax receipts $354.2 billion less than at the same time in fiscal year 2008. Then there is the truly mind-boggling fact that Social Security taxes paid in 2009 are only $19 billion, rather than the $87 billion they were predicted to be this year only last year!

But, no shortage of government tax revenue should be allowed to interfere with the advancement of socialism! No, this is a one-time opportunity for the socialists, who control the presidency and both houses of Congress, for the first time in many years and with the most socialist of all Democrats in all the key posts! They are determined to do as much mischief with this opportunity as possible and there is nowhere they want to do that mischief more than to our medical care. We must fight for our lives, or we will soon be running for our lives, especially those of us who are elderly.

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