Healthcare: Costs

Our old system is awful ...

Health care provides a textbook case of an industry plagued by numerous forms of market failure, including moral hazard, adverse selection, and free riding, as well as ad-hoc government interventions. The result is a horrendously costly mishmash, which manages to combine excessive expenditure in some areas (diagnostic testing) with too little expenditure in others (preventative care), and overall health outcomes that are middling, at best. According to Wikipedia, the U.S. ranks 38th in the global life-expectancy league table, just below Cuba (!) and just above Portugal.

The new one may be more expensive than advertised ...

Unfortunately, the reform bills that Congress has passed don’t tackle some of the system’s underlying problems, such as the lack of incentives to limit health-care expenditures. Yes, there is financing for pilot schemes that might eventually generate some savings, and, yes, a new independent board of experts will be tasked with identifying possible cuts, but to conflate these initiatives with a guaranteed cure for cost inflation is to fall victim to wishful thinking. Unless I am mistaken—and I hope I am—the reform will end up costing taxpayers considerably more than the Congressional Budget Office is predicting, and it won’t cover nearly as many people as hoped for. In another decade or so, Congress will be back at work, trying to provide genuine universal coverage at a more affordable cost.

If it's not too expensive, it's worth it ...

If Holtz-Eakin’s figures turned out to be spot on, and over the next ten years health-care reform reduced the number of uninsured by thirty million at an annual cost of $56 billion, I would still regard it as a great success.

For a projection of the costs, see ObamaCare by the Numbers: Part 1 and ObamaCare by the Numbers: Part 2 by John Cassidy, March 24, 2010, and List of countries by life expectancy by Wikipedia.