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The politics of Healthcare need reform

Comments on how Obama proposes to finance Obamacare

David Cutler

Another example is in the form of a new paper by David Cutler and Judy Feder and published by the Center for American Progress, the think tank that is an extension of the Obama administration. This is titled, "Financing Health Care Reform: A Plan to Ensure the Cost of Reform Is Budget Neutral." But the authors have already made two errors and we haven't gotten past the title.

First, nothing in the proposal is "ensured." The paper is chock-full of caveats and wiggle words, things like "could be," "might be," "would likely be," "presume," and "assume." There is no "ensure" about it, and the authors at one point even concede that many of their ideas are "somewhat speculative."

Second, the paper is not remotely "budget neutral." It includes a host of tax increases that will increase the federal budget. Now, because of the tax increases, the proposal may be "deficit neutral" but that is a whole other thing than budget neutral.

The lack of intellectual honesty in the title is reflected throughout the paper. It is a mishmash of spending cuts and tax increases. Like Peter Orszag, it hopes these spending cuts will not hurt patient care, but it offers no guidance whatsoever on how that might happen. As an example they say, "Suppose that as a result of administrative efficiencies, operational changes, and better preventive care, hospital costs fall by 15 percent. Imagine that the federal government responds to that 15 percent savings by raising hospital payments by 4 percent. The government will still save 11 percent, reducing the deficit by that amount, and hospital profits will rise by 4 percent."

Yes, indeedy, just "imagine." Better yet, let's imagine that hospital costs fall by 35 percent or 50 percent, or 75 percent with no detrimental effect on patient care! Wouldn't that be swell?

And this is what passes for analysis in Obama's New Utopia.

SOURCE: Center for American Progress