Commonwealth Prescription Is Bad Medicine

March 26, 2007

           A new study from the Commonwealth Fund touts three recent health care reform proposals as viable solutions in providing health coverage to the uninsured. Each vaunted plan contains provisions common to socialized medicine. The same study declared President Bush's health care tax deduction as the "loser."  According to experts with the National Center for Policy Analysis (NCPA), the real losers would be American taxpayers if any of the government-oriented plans were instituted.

            "Each of the other three plans is based on expanding government entitlement programs, like Medicaid and SCHIP," said NCPA Senior Fellow Devon Herrick. "We spent billions of dollars expanding Medicaid and SCHIP in the 1990s, but we haven't reduced the number of uninsured. The percentage of uninsured in the U.S. today is virtually unchanged." 

            The reason, continued Herrick, is a phenomenon economists call crowd-out. When given the opportunity to enroll in a government program, people will drop their private insurance for a program they believe to be free. Studies of crowd out have shown:

• 50 percent to 75 percent of the cost of expansion is used to cover those who were privately insured, which leads to

• No net reduction in the number of uninsured, despite the higher taxpayer burden.

            Since the Bush plan does not involve entitlement program expansion, it offers a very real opportunity to cover more of the uninsured. It is also revenue neutral, which means it would not need a tax hike to fund it. The three other plans in the Commonwealth Fund study are projected to cost millions of dollars, with no proven benefit to the American taxpayer or the uninsured.

            "It's time we learned from our past mistakes, and used common sense and sound economic principles to effect real change in our health care system," said Herrick.

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