Free health care is a very expensive proposition. Sen. Edward M. Kennedy, Massachusetts Democrat, and Sen. Christopher J. Dodd, Connecticut Democrat, are sponsoring a massive health care bill to extend coverage to 50 million Americans who supposedly do not have it. On Tuesday, the Congressional Budget Office estimated that the cost of the Kennedy-Dodd health care bill would run to at least $1.6 trillion over 10 years and that it would cover just one-third of the so-called "uninsured."
Sen. Judd Gregg, New Hampshire Republican, said the bill easily could top $2 trillion. Using the CBO estimate, Utah Republican Sen. Orrin G. Hatch's office calculates that the tab for this comes to $62,500 per uninsured person over 10 years.
White House economic adviser Lawrence H. Summers claimed in April on NBC's "Meet the Press" that President Obama's government health-insurance program would pay for itself. He promised there was so much waste and inefficiency in private insurance that a government system could save $700 billion a year just by eliminating unnecessary surgery. He said waste from surgery alone accounted for 30 percent of all health care spending in America.
According to Mr. Summers, "whether it's tonsillectomies or hysterectomies ... procedures are done three times as frequently [in some parts of the country than others] and there's no benefit in terms of the health of the population. And by doing the right kind of cost-effectiveness, by making the right kinds of investments and protection, some experts estimate that we could take as much as $700 billion a year out of our health care system."
It wasn't surprising that Tuesday's CBO cost estimate shattered the myth that the Obama plan would pay for itself. The administration systematically has underestimated the costs. In particular, it has ignored the very basic fact that if health care is provided for free, more of it will be demanded. That surely is a way to generate more unnecessary expenditures.
The estimated costs of the health care program don't take into account that many people will want to switch from private to the subsidized government insurance program, which also will drive up program costs. The Lewin Group, a health care policy research-and-management consulting firm, estimates that the proposed program could cause 119 million currently insured Americans to switch to the proposed new government program. In contrast, the CBO estimates just 15 million individuals will switch.
President Obama claims that the government takeover of the rest of the health care system is necessary to control costs. He couldn't be more extreme in his claims: "If we fail to act, premiums will climb higher, benefits will erode further, the rolls of the uninsured will swell to include millions more Americans." The numbers tell a different story.