President Barack Obama keeps warning that rising health care costs are unsustainable, therefore, we need the government to take over more of our dysfunctional health care system to reduce costs and improve quality. Yesterday, Douglas Elmendorf, the head of the Congressional Budget Office put the kibosh on this rhetorical nonsense. Elmendorf explained to both House and Senate committees that the health care bills they are considering do virtually nothing to reduce costs. In fact, they will be budget busters, making already dismal federal deficits worse rather than better. As the Washington Post reports:
The chairman of the Senate Budget Committee, Sen. Kent Conrad (D-N.D.), also has taken a leading role in the Finance Committee negotiations. Yesterday, when Elmendorf appeared before Conrad's committee to testify about the nation's long-term budget problems, Conrad focused his questions on the House and Senate committee measures, which were drafted without Republican input.
"I'm going to really put you on the spot," Conrad said. "From what you have seen from the products of the committees that have reported, do you see a successful effort being mounted to bend the long-term cost curve?"
Elmendorf responded: "No, Mr. Chairman." Although the House plan to cover the uninsured, for example, would add more than $1 trillion to federal health spending over the next decade, according to the CBO, it would trim about $500 billion from existing programs—increasing federal health spending overall.
Considering the fact that nearly any goverment program spends more than is initially projected, these new estimates for government health care program deficits are not a surprise to anyone (except for disingenuous Congress critters). Just consider another problem about which Americans are constantly told that throwing more tax dollars at it will solve: public education.
In 1970, average per pupil spending in constant dollars was around $4,500 and average SAT scores were 537 on the verbal section and 512 for the math section. By 2006, average per pupil spending more than doubled to $9,400 while SAT verbal scores averaged 502 and the average math score was 518. Sure, sure. The SAT tests a different and expanded group of kids than it did back in 1970. But even considering that fact, it shows that the hypothesis of throwing more tax dollars at a problem does not improve the quality of government services.
There is only one proven way to lower the costs and improve the quality of goods and services, and that's competition. Unless and until the health care "reformers" on Capitol Hill and in the White House grasp that plain fact, either endless cost increases or stringent health care rationing are inevitable.