NCPA - National Center for Policy Analysis


June 5, 2009

On Monday President Barack Obama's Council of Economic Advisers released a report called "The Economic Case for Health Care Reform."  The report argues that Americans must curb their consumption of medical care in order to avoid soaring federal deficits, unsustainable burdens on family budgets, and damage to the economy.  All of these claims are untrue, says Betsy McCaughey, former lieutenant governor of New York state and founder of the Committee to Reduce Infection Deaths.

The White House report makes the argument that there must be controls on what all Americans spend on health care in order to avoid government programs running huge deficits.  In truth, Medicare can be fixed without subjecting the nation to medical scarcity, says McCaughey:

  • It would be safer to reduce government's share of the health care bill rather than lowering the standard of care for everyone and depressing the nation's largest industry.
  • The nonpartisan Congressional Budget Office has suggested alternatives such as asking wealthy seniors to pay more or inching the eligibility age upward two months a year until it reaches age 70 in 2043.

The White House report warns that "health care costs have risen rapidly over the last two decades and are projected to rise even more rapidly in the future."  The truth is that health care spending is increasing at more moderate rates than in previous decades, says McCaughey:

  • Spending increased by 10 percent in 1970 and 13 percent in 1980, but over the last five years, spending increased less than 7 percent each year, and reached a low of 6 percent in 2007.
  • It's true that premiums are increasing rapidly, but the White House report incorrectly blames health costs; the real cause is the declining share of care paid for out of pocket (down to 15 percent today from 33 percent in 1975) -- auto-insurance premiums would also skyrocket if coverage suddenly included oil changes and tune-ups.

Slowing the flow of dollars into the health care industry while extending coverage to 46 million more people will create a European-like system where medical care is limited.  Hospitals will face budget cuts, nurses will be spread even thinner, and equipment will be in shorter supply.  You may be able to keep your health plan -- as politicians have promised -- but you'll find a lower standard of care when you need it, says McCaughey.

Source: Betsy McCaughey, "Obama's Voodoo Health Economics," Wall Street Journal, June 5, 2009.

For text:


Browse more articles on Health Issues