Kennedy-Dodd Health Care Bill: Why Even Bother?
The Congressional Budget Office release very preliminary numbers on the Kennedy-Dodd health care bill. The plan, which is mostly supported by Democrats, and mostly supported by President Obama, still lacks details. The upshot of the plan, 
from my skimming of the bill, is that it would require everyone to purchase health insurance, it would require employers to provide insurance to employees, and it would subsidize health insurance for the poor.
The CBO estimates that this plan would cost about $1 trillion(!), and estimates by 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.
Roughly $6,250 per uninsured person per year over ten years is not too bad, if we really could insure them. Herein lies the problem, however. The CBO also estimates that of the 46-47 million uninsured, the plan would, on net, only decrease that number by a mere 16 or 17 million people. That’s simply not that much bang for the buck.
I am not saying the Dems’ plan is a poor one, it has a lot of merits. It attempts to solve the moral hazard problem by forcing everyone to get insurance, but all insurance programs are bound to fail because they will always lose the information battle: you know more about your health care than the plan administrators. What everyone is forgetting is that the problem is not getting people insured; the problem is getting everyone affordable health care. Instead of trying to get everyone insured, let’s let people do it themselves with government-subsidized health care accounts that can be bequeathed. This is a plan supported by many economists, and I have detailed it here.
June 28, 2009 |
Posted in: Policy, Politics |
Author: Charles | 
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2 Responses
I’m baffled by how they are passing this new legislation unread or giving something so crucial enough air time for the citizens to dissect.
But one question that bugs me is that if it is such a “moral hazard” why not just take over all the hospitals and doctors and make healthcare free to whomever walks in the door?
Cheap or free healthcare is the crux of the problem. If there is no cost, people will have no incentive to economize. Think of health care like any other good. How long would any industry stay in business if they gave away their product for free?
The problem with healthcare is that we essentially don’t see the cost–insurance, Medicare, or Medicaid picks up the cost and we pay for it through a very disassociated manner (lower paychecks or taxes). The only way, I see, to solve that problem is have everybody pay for their own healthcare through spending accounts (which are provided through tax credits).
Please continue discussion on the forum: link
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