You've seen those commercials in which an airline pilot, or surgeon, or nuclear engineer is giving expert advice only to acknowledge eventually to his nonplussed listeners that while he is not actually a fill-in-the-blank, he did stay at a Holiday Inn Express last night. Do you ever get the feeling that we are getting Holiday Inn Express government?
Does anything they say make basic economic sense? President Obama and the Democratic Party propose to save money (or what they call "bend the cost curve") on health care spending. They will spend less, they say, but also cover more people -- the 47 million or 30 million uninsured (Obama has used both numbers). This will be accomplished without reducing care for anyone and without raising taxes on anyone except the rich. In fact, care will be improved.
Sounds great. But do these people know what they're doing? They mouth the words "choice" and "competition" but only, ironically, in praise of a "public option." The concept of encouraging choice and competition in the health insurance market -- say by permitting interstate sales -- is off the table.
The Wall Street Journal provided a handy chart of "Uncle Sam's Cost Overruns." In 1965, when Medicaid was enacted, the House Ways and Means Committee estimated that first year costs would amount to about $238 million. The actual price was $1 billion. The program now costs $251 billion annually and is climbing fast. The record is similar for Medicare. In 1965, Congress predicted that by 1990, Medicare would be costing $12 billion. The actual cost -- $90 billion. As Peter Orszag, director of the Office of Management and Budget has admitted, "If costs per enrollee in Medicare and Medicaid grow at the same rate over the next four decades as they have over the past four, those two programs will increase from 5 percent of GDP today to 20 percent by 2050."
So the same people who brought you cost spirals in Medicare and Medicaid now propose to introduce another government health program. Don't worry, they assure us, we know how to provide efficiencies. It's not necessary to dwell on the risible claim that they will cut half a trillion in waste from the Medicare budget. If they know where that waste is, why aren't they cutting it now? Where, on the books, are the federal waste-cutting initiatives?
The administration has also highlighted two other ideas that will supposedly provide tremendous cost savings. Both have been in the news lately.