The cost of Universal Healthcare

The proposed healthcare reform measure being touted by the Obama White House is a recipe for failure and the result will be a complete government takeover of healthcare. That will mean higher taxes, lower quality of care, larger deficits, and bureaucratic rationing.

Despite a weak economy and facing trillion dollar deficits Barrack Obama is hurrying to restructure the healthcare system at a cost of more than a trillion dollars. The chances of sweeping healthcare reform being enacted are high since a significant number of Americans have come to accept the belief that healthcare for everyone is a civil right. A recent Rasmussen poll shows 42% of Americans believe healthcare is a fundamental right.

According to the White House, the start up cost for this program is estimated to be a whopping $634 billion. According to the Congressional Budget Office, however, the cost will be $1 trillion and will only cover one third of the 48 million uninsured Americans. Further more the CBO reports 23 million Americans will loose their private healthcare plans.

Coming up with the money to pay for this entitlement program is proving to be problematic. As it stands the spending cuts praised by the Obama administration only account for $309 billion and his proposed tax increases will only raise $267 billion leaving a shortfall of $60 billion.

So far the Democrats have refused to tell us how they are going to pay for their health plan. What we do know about the plan is Obama’s intentions to increase taxes on businesses and the wealthy and hire 800 new IRS agents to go after offshore tax shelters.

Obama is also considering a plan that would tax the health benefits provided by private employers. This is the very thing Obama criticized John McCain for during the 2008 presidential campaign. If health insurance was taxed as regular income, the government could potentially collect an additional $250 billion a year. Those costs will be shouldered by everyone insured by their employer, provided employers continue to offer healthcare once the tax shelter is lifted.

One notorious pitfall of any government program is that the program always costs more than originally estimated. One reason is that slick politicians lowball the cost as a market strategy to get the measure past and because there are always hidden costs and unforeseen crisis that require more money to keep the program solvent.

Both Medicare and Medicaid cost significantly more than they were originally estimated by over $60 billion. Medicare will exceed the payroll tax by 2017. Medicare is already committed to paying $38 trillion over the next 75 years. Adding to those costs Obama’s nationalized health plan will run an additional $15 trillion.

Another example is President Bush’s massive $534 billion Prescription Drug Benefit Plan to Medicare. Current estimates now place that at $1.2 trillion by 2015. And that’s not all; the 75 year outlook places the added burden to Medicare at $4.4 trillion.

Nowhere to be found in any of these proposals is how to cover those future costs.

If Massachusetts State run healthcare model teaches us anything it is giving the government greater control over healthcare will result in burdensome consequences for taxpayers and healthcare consumers. The original cost estimate was $125 million. This price tag, however, has risen faster than originally predicted to an excess of $400 million in 2009 and will cost the state an estimated $869 million in 2010. Many recipients of the new Massachusetts health system find themselves without a physician because doctor’s offices aren’t taking new patients.

Politicians, in their vigor to promote entitlement spending, say they can do it all; cut taxes, reduce the deficit, and provide healthcare to everyone at a lower cost. History has shown this to be false. Something has to give; expect higher costs or less coverage. This will result in nothing less than lucrative government contracts financed by the tax payer.

Here we have another expensive federal program when Federal Reserve Chairman Ben Bernanke warned even without this trillion dollar healthcare reform the ever increasing costs of current programs will soon affect interest rates, economic growth and financial stability. Government has shown us that cutting spending in any meaningful way is pure fantasy. Since it is difficult for politicians to relinquish any government program there are only two choices; raise taxes or borrow money further increasing the deficit.