Playing Good Cop, Bad Cop | Jagadeesh Gokhale and Kent Smetters | Cato Institute: Commentary

Playing Good Cop, Bad Cop | Jagadeesh Gokhale and Kent Smetters | Cato Institute: Commentary: "It has become clear that this health care 'reform' effort is being driven by something other than the real and urgent need to reduce the nation's growing health care costs. The Congressional Budget Office recently declared that the administration's proposed mechanism for controlling health care costs--a Medicare Advisory Committee 'on steroids'--would likely be ineffective.

What, then, explains the enormous political push to cover the uninsured? The customary justification for extending such coverage is that so many Americans simply cannot afford health insurance. Partly, this is the result of government regulations that cause segmented insurance markets. Moreover, in most insurance markets, those facing a low risk of loss prefer to forgo insurance coverage at average premium rates. It's no surprise, therefore, that a large segment of the uninsured are young individuals that are much less likely to experience health problems.

One explanation of the drive toward mandatory health insurance is the need to reinforce funding for Medicare, which is rapidly running out of revenues. The young will consume relatively few medical services, but their mandated coverage would provide a rationale for additional taxes. This is very similar to how Social Security's finances were buttressed repeatedly--by expanding coverage to additional occupations and population groups. It's the reason why the leadership of retiree lobbies is maintaining silence despite the possibility that the new program will introduce cuts in Medicare benefits."

"Note that, according to the proposed legislation, mandatory health insurance coverage will commence in 2013. Calculations based on information from the Centers of Medicare and Medicaid Services indicates that the program's true "10-year" net cost would become almost $2 trillion through the year 2022."

So in order to make it look cheaper they make it ramp up slowly so the first 10 years are much cheaper than later decades.

"Taking an even longer view, we calculate that the permanent program would add $13.6 trillion to the federal government's total unfunded obligations in today's dollars. That is, the government would need to have that amount in the bank today, invested at interest, to fully finance the new program's subsidy costs as they come due. Social Security and Medicare actuaries estimate that these two programs' unfunded obligations under today's policies exceed $100 trillion (not billion) in today's dollars."