Sunday, March 29, 2009

"Take the $600 Billion in New Revenue from Obama's 'Cap and Trade' Climate Change Proposal and Use it To Pay for Health Care Reform"

Last week Senate Majority Leader Harry Reid was quoted as raising the possibility we could take the $600 billion in new revenue projected from a "cap-and-trade" plan to cut green house-gas emissions and use some or all of it to help pay the estimated $1.5 trillion cost for comprehensive health care reform.

Energy and climate change issues aside that would be a bad idea--a really bad idea.

The biggest health care challenge we face in America is the cost of health care. To really reform the system we have to bring its costs under control. The only way we can achieve sustainable health care reform is to pay for most of the cost of any reform plan out of the savings we achieve fixing the system and its perverse incentives to spend more without regard to what we receive.

Finding $600 billion from another part of the budget to simply subsidize these out-of-control costs would be tantamount to just raising taxes to keep paying this unsustainable bill. Pouring another $600 billion into the system would have the supply-side inflationary effect of just pushing costs up even more--pour lots more money in and it will get spent. Why would any stakeholder--provider or beneficiary--have any incentive to reduce health care costs?

But finding $600 billion would go a long way to also meaning no one in Washington would have to face the hard choices needed to actually reform our system. It would mean we could just promise everyone painless access to whatever health care services they want. Just think how happy consumers, doctors, drug companies, hospitals, and all the rest would be.

That is until the money ran out.

But, you know, this is just shortsighted and politically expedient enough to go somewhere.
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