Thursday, July 16, 2009

'The Curve is Being Raised'

It's starting to look a lot like the Congressional Budget Office isn't down with nationalizing health care.
The director of the Congressional Budget Office issued a warning to Democrats Thursday that their health care proposals would raise costs, not lower them.

One day after a Senate panel approved its version of the health care reform plan, the first committee to do so, CBO Director Doug Elmendorf gave a dose of bad medicine to a separate committee.

Asked by Senate Finance Committee Chairman Kent Conrad, D-N.D., whether costs would be lowered -- also known as "bending the curve" -- Elmendorf responded: "The curve is being raised."

Subsidies to help uninsured people would raise federal health care spending, which is already growing at an unsustainable rate, Elmendorf explained at the hearing. The Medicare and Medicaid cuts that lawmakers have offered to pay for the coverage expansion aren't big enough to offset the cost trend, particularly in the long term, he said.

House Republican Leader John Boehner seized on the comments, calling on Democrats to scrap their plans in light of the assessment.

Senate Republican Leader Mitch McConnell called it a "wake up call" for Democrats.
Anybody with a lick of sense knows that this will escalate costs, not lower them. Medicare cost some 900% more than originally projected cause they did not take into account the increased consumption of services when the services themselves were perceived to be "free." A basic principle of microeconomics is that people consume resources at their marginal value; in other words, what does it cost me to to consume the next unit? If the cost is perceived to be zero, folks will value it as such and consume it in the same light.

The Democrats need to put down Das Capital and try reading Adam Smith for a change.

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