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Tuesday, October 27, 2009

Small Biz Health Care Daily: Romer vs. Reality

The Obama administration keeps pushing the ridiculous idea that more government involvement in health care – including more government spending on health care and a government health plan – will be good for health care costs and the federal budget over the long haul.

For example, Christina Romer, chairwoman of the Council of Economic Advisers, declared on October 26:

“Some have argued that it is irresponsible to reform our health care system at a time when the budget deficit is so large and our long-run fiscal problems are so severe. I firmly believe the opposite: it is fiscally irresponsible not to do health care reform… In health care reform we have an opportunity to navigate the difficult path between long-run fiscal responsibility and sensible short-run macroeconomic policy. Done correctly, health care reform can genuinely slow the growth rate of health care costs and thus put us on a path to greatly reduced budget deficits in the long run.”

In reality, absolutely no evidence exists to indicate that more government will somehow lead to reduced health care costs and be beneficial in terms of the federal budget. Indeed, history and economics point to the exact opposite. As noted in the October 27 Wall Street Journal (“How Government Insurance Would Work” by Janet Adamy): “But government insurance programs have historically cost more than planned. Medicare had a modest cost expectation when it was created in 1965. It is now one of the biggest contributors to the federal budget deficit.”

That's economic reality.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

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