Wednesday, July 30, 2008

The Price of RomneyCare

The July 29, 2008 Wall Street Journal has published a good OpEd criticizing the cost overruns of the Massachusetts "universal" health care plan. Here are a few excerpts:
As this public option gets overwhelmed, budget gaskets are blowing everywhere. Mr. Patrick had already bumped up this year's spending to $869 million, $144 million over its original estimate. Liberals duly noted that these tax hikes are necessary because enrollment in Commonwealth Care is much higher than anticipated. But of course more people will have coverage if government gives it to them for free. The problem is that someone has to pay for it.

Thus the extra tab of $129 million, which may need to go higher because it relies on uncertain federal funds from Medicaid. For now, Mr. Patrick wants one-time (yeah, right) charges of $33 million on insurers and $28 million on providers, plus some shuffling of state funds. The balance comes from an estimated $33 million boost in the state's "pay or play" tax: If businesses don't offer "fair and reasonable" insurance to their employees, they get hit.

...The main reason people are uninsured is because coverage is too expensive. Massachusetts didn't have many options for reforming the way health dollars are laundered in the third-party payment system created by the federal tax code. But it could have helped make insurance cheaper by reforming its private market before defaulting to public programs.
Their economic analysis is on target. It's also important to recognize that these problems arise from government interference in the free market. Patients, providers, and insurers are not allowed to negotiate voluntarily in the free market for their mutual benefit, but instead must do so under constraints designed to somehow guarantee health care for everyone. These adverse economic results are a consequence of this basic violation of their right to contract.