NCPA - National Center for Policy Analysis


July 2, 2009

Health care reform, if enacted, is going to be expensive -- estimates range from around $1 trillion for a plan introduced by Sen. Ted Kennedy (D-Mass.) to $1.6 trillion or more for other proposals -- so the Obama Administration has come up with a list of $948 billion in savings it believes can be obtained by enacting such changes, with the goal of making any health care reform legislation pay for itself, says

The proposed savings include:

  • Some $309 billion in reduced costs from the Medicare and Medicaid programs and $326 billion in additional revenue that will come from such things as raising taxes on families earning more than $250,000 a year.
  • The Medicare and Medicaid savings include such things as assumed improvements in patient care and reduced hospitalization rates, as well as reduced Medicare payments to private insurers and improved "payment accuracy."
  • The Administration added to that an estimate of $313 billion more it feels can be saved through such things as productivity adjustments to Medicare and Medicaid, reduced hospital subsidies and by paying lower prices in Medicare Part D, the prescription-drug program.
  • It also includes cuts in waste, fraud and abuse.

The trillion-dollar question is whether a government program would help promote efficient, quality care, thus realizing these savings estimates and perhaps more -- or whether it would simply be a giant mess of bureaucracy and inefficiency, possibly saving very little or even costing taxpayers billions of dollars more, says

John C. Goodman, President, CEO and the Kellye Wright Fellow of the National Center for Policy Analysis, wrote in a recent blog post: "Because this is a complex system, it is very hard to predict how all this new spending will affect the system as a whole.  But we can be fairly confident total spending will rise -- and probably by a lot… No matter what else happens, if I and my doctors don't change what we are doing for me and you and your doctors don't change what is being done for you….. and so forth….. aggregate spending will not change."

Source: Joanna Ossinger, "Will Health Care Reform Really Pay Off?", June 30, 2009.


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