NCPA - National Center for Policy Analysis


August 26, 2004

John Kerry's health plan would cost in excess of $1 trillion over 10 years, says John Goodman, president of the National Center for Policy Analysis. However, the cost could be much higher, yet accomplish very little.

The ostensible purpose of the proposal is to insure about two-thirds of the estimated 44 million people without health insurance at any one time. However, even Kerry assumes that for every 10 people who sign up, three people will lose private insurance from an employer; and it could be much worse.

  • Studies in the 1990s found that every additional dollar spent on Medicaid led to a reduction in private insurance of 50 to 75 cents.
  • More recent evidence suggests that private sector crowd-out is approaching one-to-one: Each new Medicaid enrollee is offset by one less person with private insurance.
  • Moreover, most of the private sector subsidies will go to people who are already insured; and employers get their subsidies even if they fail to insure a single additional employee.

The changes Kerry proposes are far more radical than he has let on, says Goodman:

  • If he is successful, millions of middle-income families will enroll in Medicaid, the federal-state health program for the poor.
  • Millions more will get their insurance through a system of managed competition, similar to what Hillary Clinton proposed more than a decade ago.
  • Most people would be unable to remain in the private health plan they have today.

Versus the budget Kerry has promised to balance, the program cost is more than three times the new revenue he hopes to get from high-income earners.

Source: John Goodman, "Kerrycare," Wall Street Journal, August 26, 2004.

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