Health Care

Health Care Reform Passes, But at What Cost?

| by Reason Foundation

A few minutes ago, the House passed the Senate health care bill. Now the House is preparing to pass a reconciliation bill that will amend the Senate bill—removing legislative kickbacks, changing the tax structure and revenue mechanisms, and increasing the insurance subsidies, among other things. The Senate will probably pass these changes. But it may not. Either way, the original Senate bill has now been passed by both houses. It will be sent to President Obama, and he will sign it.

It's being hailed as a major legislative achievement, and in size and scope, it certainly is. But for those of us who do not take comfort in legislation of great size and scope, it's an achievement of dubious merit. 

But it's not just the size and scope. It's also that this bill is unlikely to achieve most of the objectives that have been set out for it.

The retail argument in favor of the bill was basically twofold: It provides affordable insurance coverage for 30 million, and it reduces the deficit, thereby making it fiscally sensible.

But CBO is clear: In conjunction with the upcoming doc fix—which was split off from the original bill and will be passed later—it doesn't lower the deficit. And if Medicare savings are used to extend the solvency of the program, as Democrats frequently claim will happen, then that eats up the deficit reduction.

The coverage figure is the best argument for the bill; all indications are that it's likely to result in health coverage for 30 million or more individuals. But the evidence that it will do so in an affordable manner is thin. The CBO estimates that the average premium cost will rise 10-13 percent (with a little more than half of folks receiving subsidies). And despite claims that the bill will put a stop to big rate increases, the evidence of the Massachusetts plan, which is very similar to Obamacare, suggests otherwise: Since the start of its plan, that state has seen double digit rate hikes, and expects more to come. And its average premium price is the highest in the nation. How can anyone possibly define this as "affordable"?

In the end, then, we're left with a highly expensive, fiscally dangerous expansion of health insurance that locks even more people into a broken system. That's an achievement, all right, but not a particularly good one.