NCPA - National Center for Policy Analysis


May 31, 2007

In the "detailed" universal care plan offered up this week by Sen. Barack Obama (Ill.-D), he claims he can save every family an average of $2,500 a year on its premiums.  How does he accomplish this miracle?  Simple: spend money on IT, encourage prevention, make health care universal, import drugs from Canada, slap on price controls, add some government subsidies, and voila!

No serious health care expert can possibly believe this will work, says Investor's Business Daily (IBD):

  • Improved information technology can save some money -- about $77 billion a year, according to a Rand study.
  • But that's still less than 3 percent of total health spending, and those savings, Rand says, would take 15 years to materialize.

Encouraging preventive care might save money, but probably won't.  The Department of Health and Human Services notes that "the health of the nation continues to improve overall."  Death rates from many leading causes of death, including heart disease, cancer and stroke, are on the downtrend, while life expectancy is steadily climbing.  Presumably, much of this is due to improvements in preventive medicine.  Yet, at the same time, health spending is skyrocketing.  Why would more preventive care change anything?

Other problems with Obama's plan quickly emerge.  His new Medicare-like plan for people without employer-provided insurance, the self-employed and small businesses would quickly explode in size as businesses take the opportunity to dump their workers and their health-care cost problems into the government plan.

  • At $50 billion to $65 billion a year, Obama's forecast for the taxpayer cost of this reform plan is laughably low.
  • Just providing seniors on Medicare a prescription drug benefit costs more than $30 billion a year.

Source: Editorial, "Dr. Obama's Snake Oil," Investor's Business Daily, May 30, 2007.


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